Uniform Prudent Management of Institutional Funds Act (UPMIFA)

The Uniform Prudent Management of Institutional Funds Act (UPMIFA) provides guidance and authority to charitable organizations concerning the management, investment and expenditure of funds held by those organizations and UPMIFA imposes additional duties on those who manage and invest charitable funds as well as on the Boards of non-profit organizations who authorize spending decisions. These duties provide additional protections for charities and also protect the interests of donors who want to see their contributions used wisely.

UPMIFA modernizes the rules governing expenditures from endowment funds, both to provide stricter guidelines on spending from endowment funds and to give institutions the ability to cope more easily with fluctuations in the value of the endowment by authorizing the substitution of prudent spending rules for the previously inflexible requirements for maintaining historical dollar value.

Finally, UPMIFA updates the provisions governing the release and modification of restrictions on charitable funds to permit more efficient management of these funds. These provisions derive from the approach taken in the Uniform Trust Code (UTC) for modifying charitable trusts. Like the UTC provisions, UPMIFA’s modification rules preserve the historic position of the attorneys general in most states as the overseers of charities. To download a brief overview of UPMIFA, please click here.

Shipman & Goodwin Partner Barry C. Hawkins served as the Chairman of the Uniform Law Commission (“ULC”) (formerly NCCUSL) Committee which drafted UPMIFA over a four year period from 2002 to 2006. Since then he has chaired the ULC Enactment Committee for UPMIFA, leading the national effort which has resulted in UPMIFA having been enacted in 44 states as of October 2009. In the efforts to obtain virtually full enactment by the end of 2010, Hawkins has conducted educational programs in more than 20 states and testified in the legislatures of many others. He has been quoted in The Wall Street Journal, New York Times, and several dozen regional newspapers and national journals on UPMIFA and has conducted five national web based programs for attorneys and accountants, either directly on UPMIFA or in conjunction with the new GAAP accounting guidelines promulgated by the Financial Accounting Standards Board (FASB) in its August 2008 Guidance For Non-Profit’s Financial Statement Preparation (FSB 117-1).

Hawkins conducts a national practice in UPMIFA compliance and interpretation and continues to write and lecture nationally on this subject which has gained even greater importance as a result of the challenges faced by non-profit institutions over the last two years facing diminished investment performance, and the need to make spending decisions from so-called “under water” funds.

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Primary Contacts

Barry C. Hawkins
(203) 324-8104

Additional Contacts