§ 552. Standard of conduct in managing and investing an institutional
fund.

(a) Subject to the intent of a donor expressed in a gift instrument,
an institution, in managing and investing an institutional fund, shall
consider the purposes of the institution and the purposes of the
institutional fund.

(b) In addition to complying with the duty of loyalty imposed by law
other than this article, each person responsible for managing and
investing an institutional fund shall manage and invest the fund in good
faith and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances.

(c) In managing and investing an institutional fund, an institution
consistent with section 717 (Duty of Directors and Officers):

(1) may incur only costs that are appropriate and reasonable in
relation to the assets, the purposes of the institution, and the skills
available to the institution; and

(2) shall make a reasonable effort to verify facts relevant to the
management and investment of the fund.

(d) An institution may pool two or more institutional funds for
purposes of management and investment.

(e) Except as otherwise provided by a gift instrument, the following
rules apply:

(1) In managing and investing an institutional fund, the following
factors, if relevant, must be considered: (A) general economic
conditions; (B) the possible effect of inflation or deflation; (C) the
expected tax consequences, if any, of investment decisions or
strategies; (D) the role that each investment or course of action plays
within the overall investment portfolio of the fund; (E) the expected
total return from income and the appreciation of investments; (F) other
resources of the institution; (G) the needs of the institution and the
fund to make distributions and to preserve capital; and (H) an asset's
special relationship or special value, if any, to the purposes of the
institution.

(2) Management and investment decisions about an individual asset must
be made not in isolation but rather in the context of the institutional
fund's portfolio of investments as a whole and as a part of an overall
investment strategy having risk and return objectives reasonably suited
to the fund and to the institution.

(3) Except as otherwise provided by law other than this article, an
institution may invest in any kind of property or type of investment
consistent with this article.

(4) An institution shall diversify the investments of an institutional
fund unless the institution prudently determines that, because of
special circumstances, the purposes of the fund are better served
without diversification. An institution shall review a decision not to
diversify as frequently as circumstances require, but at least annually.

(5) Within a reasonable time after receiving property, an institution
shall make and carry out decisions concerning the retention or
disposition of the property or to rebalance a portfolio, in order to
bring the institutional fund into compliance with the purposes, terms,
and distribution requirements of the institution as necessary to meet
other circumstances of the institution and the requirements of this
article.

(6) A person that has special skills or expertise, or is selected in
reliance upon the person's representation that the person has special
skills or expertise, has a duty to use those skills or that expertise in
managing and investing institutional funds.

(f) Each institution shall adopt a written investment policy setting
forth guidelines on investments and delegation of management and
investment functions in accord with the standards of this article.