Assembly Bill A7907D

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  7907

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                             April 28, 2009
                               ___________

Introduced  by  M. of A. BING -- read once and referred to the Committee
  on Corporations, Authorities and Commissions

AN ACT to amend the not-for-profit corporation law, the religious corpo-
  rations law, the estates, powers and trusts law  and  the  surrogate's
  court  procedure  act, in relation to adopting a prudent management of
  institutional funds standard; and to repeal certain provisions of  the
  not-for-profit corporation law relating thereto

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The not-for-profit corporation law is amended by  adding  a
new article 5-A to read as follows:
                               ARTICLE 5-A
              PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT
SECTION 550. SHORT TITLE.
        551. DEFINITIONS.
        552. STANDARD  OF  CONDUCT IN MANAGING AND INVESTING AN INSTITU-
               TIONAL FUND.
        553. APPROPRIATION FOR EXPENDITURE OR ACCUMULATION OF  ENDOWMENT
               FUND; RULES OF CONSTRUCTION.
        554. DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.
        555. RELEASE  OR  MODIFICATION  OF  RESTRICTIONS  ON MANAGEMENT,
               INVESTMENT, OR PURPOSE.
        556. REVIEWING COMPLIANCE.
        557. APPLICATION TO EXISTING INSTITUTIONAL FUNDS.
        558. RELATION TO ELECTRONIC SIGNATURES IN  GLOBAL  AND  NATIONAL
               COMMERCE ACT.
S 550. SHORT TITLE.
  THIS  ARTICLE  MAY  BE KNOWN AND MAY BE CITED AS THE "NEW YORK PRUDENT
MANAGEMENT OF INSTITUTIONAL FUNDS ACT".
S 551. DEFINITIONS.
  AS USED IN THIS ARTICLE:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11125-02-9
              

A. 7907                             2

  (A) "CHARITABLE PURPOSE" MEANS THE RELIEF OF POVERTY, THE  ADVANCEMENT
OF  EDUCATION  OR  RELIGION, THE PROMOTION OF HEALTH, THE PROMOTION OF A
GOVERNMENTAL PURPOSE, OR ANY OTHER PURPOSE THE ACHIEVEMENT OF  WHICH  IS
BENEFICIAL TO THE COMMUNITY.
  (B) "ENDOWMENT FUND" MEANS AN INSTITUTIONAL FUND OR PART THEREOF THAT,
UNDER  THE  TERMS  OF A GIFT INSTRUMENT, IS NOT WHOLLY EXPENDABLE BY THE
INSTITUTION ON A CURRENT BASIS. THE TERM DOES NOT INCLUDE ASSETS THAT AN
INSTITUTION DESIGNATES AS AN ENDOWMENT FUND FOR ITS OWN USE.
  (C) "GIFT INSTRUMENT" MEANS A RECORD OR RECORDS, INCLUDING AN INSTITU-
TIONAL SOLICITATION, UNDER WHICH PROPERTY IS GRANTED TO, TRANSFERRED TO,
OR HELD BY AN INSTITUTION AS AN INSTITUTIONAL FUND.
  (D) "INSTITUTION" MEANS: (1)  A  PERSON,  OTHER  THAN  AN  INDIVIDUAL,
ORGANIZED  AND  OPERATED  EXCLUSIVELY  FOR  CHARITABLE  PURPOSES;  (2) A
GOVERNMENT OR GOVERNMENTAL SUBDIVISION, AGENCY, OR  INSTRUMENTALITY,  TO
THE  EXTENT THAT IT HOLDS FUNDS EXCLUSIVELY FOR A CHARITABLE PURPOSE; OR
(3) A TRUST THAT HAD BOTH CHARITABLE AND NONCHARITABLE INTERESTS,  AFTER
ALL NONCHARITABLE INTERESTS HAVE TERMINATED.
  (E)  "INSTITUTIONAL  FUND"  MEANS A FUND HELD BY AN INSTITUTION EXCLU-
SIVELY FOR  CHARITABLE  PURPOSES.  THIS  TERM  SHALL  NOT  INCLUDE:  (1)
PROGRAM-RELATED  ASSETS; (2) A FUND HELD FOR AN INSTITUTION BY A TRUSTEE
THAT IS NOT AN INSTITUTION; OR (3) A FUND IN WHICH A BENEFICIARY THAT IS
NOT AN INSTITUTION HAS AN INTEREST, OTHER THAN AN  INTEREST  THAT  COULD
ARISE UPON VIOLATION OR FAILURE OF THE PURPOSES OF THE FUND.
  (F) "PERSON" MEANS AN INDIVIDUAL, CORPORATION, BUSINESS TRUST, ESTATE,
TRUST,   PARTNERSHIP,  LIMITED  LIABILITY  COMPANY,  ASSOCIATION,  JOINT
VENTURE, PUBLIC CORPORATION,  GOVERNMENT  OR  GOVERNMENTAL  SUBDIVISION,
AGENCY, OR INSTRUMENTALITY, OR ANY OTHER LEGAL OR COMMERCIAL ENTITY.
  (G)  "PROGRAM-RELATED  ASSET"  MEANS  AN  ASSET HELD BY AN INSTITUTION
PRIMARILY TO ACCOMPLISH A CHARITABLE PURPOSE OF THE INSTITUTION AND  NOT
PRIMARILY FOR INVESTMENT.
  (H)  "RECORD" MEANS INFORMATION THAT IS INSCRIBED ON A TANGIBLE MEDIUM
OR THAT IS STORED IN AN ELECTRONIC OR OTHER MEDIUM AND IS RETRIEVABLE IN
PERCEIVABLE FORM.
S 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 CHARITABLE 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:
  (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 CONDI-

A. 7907                             3

TIONS; (B) THE POSSIBLE  EFFECT  OF  INFLATION  OR  DEFLATION;  (C)  THE
EXPECTED  TAX  CONSEQUENCES,  IF ANY, OF INVESTMENT DECISIONS OR STRATE-
GIES; (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 CHARITABLE
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  REASONABLY  DETERMINES  THAT, BECAUSE OF
SPECIAL CIRCUMSTANCES, THE PURPOSES OF THE FUND ARE BETTER SERVED  WITH-
OUT DIVERSIFICATION.
  (5)  WITHIN A REASONABLE TIME AFTER RECEIVING PROPERTY, AN INSTITUTION
SHALL MAKE AND CARRY OUT DECISIONS CONCERNING THE RETENTION OR  DISPOSI-
TION  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.
S 553. APPROPRIATION FOR EXPENDITURE OR ACCUMULATION OF ENDOWMENT  FUND;
         RULES OF CONSTRUCTION.
  (A) SUBJECT TO THE INTENT OF A DONOR EXPRESSED IN THE GIFT INSTRUMENT,
AN  INSTITUTION MAY APPROPRIATE FOR EXPENDITURE OR ACCUMULATE SO MUCH OF
AN ENDOWMENT FUND AS THE INSTITUTION DETERMINES IS PRUDENT FOR THE USES,
BENEFITS, PURPOSES, AND DURATION FOR WHICH THE ENDOWMENT FUND IS  ESTAB-
LISHED. UNLESS STATED OTHERWISE IN THE GIFT INSTRUMENT, THE ASSETS IN AN
ENDOWMENT  FUND  ARE  DONOR-RESTRICTED  ASSETS  UNTIL  APPROPRIATED  FOR
EXPENDITURE BY THE INSTITUTION. IN MAKING A DETERMINATION TO APPROPRIATE
OR ACCUMULATE, THE INSTITUTION SHALL ACT IN GOOD FAITH,  WITH  THE  CARE
THAT  AN  ORDINARILY  PRUDENT  PERSON  IN A LIKE POSITION WOULD EXERCISE
UNDER SIMILAR  CIRCUMSTANCES,  AND  SHALL  CONSIDER,  IF  RELEVANT,  THE
FOLLOWING FACTORS:
  (1) THE DURATION AND PRESERVATION OF THE ENDOWMENT FUND;
  (2) THE PURPOSES OF THE INSTITUTION AND THE ENDOWMENT FUND;
  (3) GENERAL ECONOMIC CONDITIONS;
  (4) THE POSSIBLE EFFECT OF INFLATION OR DEFLATION;
  (5)  THE  EXPECTED  TOTAL  RETURN  FROM INCOME AND THE APPRECIATION OF
INVESTMENTS;
  (6) OTHER RESOURCES OF THE INSTITUTION; AND
  (7) THE INVESTMENT POLICY OF THE INSTITUTION.
  (B) TO LIMIT THE AUTHORITY TO APPROPRIATE FOR EXPENDITURE  OR  ACCUMU-
LATE UNDER PARAGRAPH (A) OF THIS SECTION, A GIFT INSTRUMENT MUST SPECIF-
ICALLY STATE THE LIMITATION.

A. 7907                             4

  (C)  TERMS IN A GIFT INSTRUMENT DESIGNATING A GIFT AS AN ENDOWMENT, OR
A DIRECTION  OR  AUTHORIZATION  IN  THE  GIFT  INSTRUMENT  TO  USE  ONLY
"INCOME,"  "INTEREST,"  "DIVIDENDS,"  OR "RENTS, ISSUES, OR PROFITS," OR
"TO PRESERVE THE PRINCIPAL INTACT," OR WORDS OF SIMILAR IMPORT:
  (1)  CREATE  AN  ENDOWMENT  FUND  OF  PERMANENT  DURATION UNLESS OTHER
LANGUAGE IN THE GIFT INSTRUMENT LIMITS THE DURATION OR  PURPOSE  OF  THE
FUND; AND
  (2)  DO  NOT OTHERWISE LIMIT THE AUTHORITY TO APPROPRIATE FOR EXPENDI-
TURE OR ACCUMULATE UNDER PARAGRAPH (A) OF THIS SECTION.
S 554. DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.
  (A) SUBJECT TO ANY SPECIFIC LIMITATION SET FORTH IN A GIFT  INSTRUMENT
OR  IN  LAW  OTHER  THAN THIS ARTICLE, AN INSTITUTION MAY DELEGATE TO AN
EXTERNAL AGENT THE MANAGEMENT AND INVESTMENT OF AN INSTITUTIONAL FUND TO
THE EXTENT THAT  AN  INSTITUTION  COULD  PRUDENTLY  DELEGATE  UNDER  THE
CIRCUMSTANCES.  AN  INSTITUTION  SHALL  ACT IN GOOD FAITH, WITH THE CARE
THAT AN ORDINARILY PRUDENT PERSON IN  A  LIKE  POSITION  WOULD  EXERCISE
UNDER SIMILAR CIRCUMSTANCES, IN:
  (1) SELECTING AN AGENT;
  (2)  ESTABLISHING  THE  SCOPE  AND TERMS OF THE DELEGATION, CONSISTENT
WITH THE PURPOSES OF THE INSTITUTION AND THE INSTITUTIONAL FUND; AND
  (3) PERIODICALLY REVIEWING THE AGENT'S ACTIONS IN ORDER TO MONITOR THE
AGENT'S PERFORMANCE AND COMPLIANCE WITH  THE  SCOPE  AND  TERMS  OF  THE
DELEGATION.
  (B)  IN  PERFORMING  A DELEGATED FUNCTION, AN AGENT OWES A DUTY TO THE
INSTITUTION TO EXERCISE REASONABLE CARE TO COMPLY  WITH  THE  SCOPE  AND
TERMS OF THE DELEGATION.
  (C) AN INSTITUTION THAT COMPLIES WITH PARAGRAPH (A) OF THIS SECTION IS
NOT  LIABLE  FOR THE DECISIONS OR ACTIONS OF AN AGENT TO WHICH THE FUNC-
TION WAS DELEGATED.
  (D) BY ACCEPTING DELEGATION OF A  MANAGEMENT  OR  INVESTMENT  FUNCTION
FROM  AN INSTITUTION THAT IS SUBJECT TO THE LAWS OF THIS STATE, AN AGENT
SUBMITS TO  THE  JURISDICTION  OF  THE  COURTS  OF  THIS  STATE  IN  ALL
PROCEEDINGS ARISING FROM OR RELATED TO THE DELEGATION OR THE PERFORMANCE
OF THE DELEGATED FUNCTION.
  (E)  AN  INSTITUTION  MAY CONTRACT WITH AN AGENT IN RELATION TO DELEG-
ATION UNDER PARAGRAPH (A) OF THIS SECTION AND MAY AUTHORIZE THE  PAYMENT
OF COMPENSATION FOR SUCH AGENT.
  (F) AN INSTITUTION MAY DELEGATE MANAGEMENT AND INVESTMENT FUNCTIONS TO
ITS COMMITTEES, OFFICERS, OR EMPLOYEES AS AUTHORIZED BY THE LAWS OF THIS
STATE  OTHER THAN THIS ARTICLE, AS SET FORTH IN, INTER ALIA, SECTION 514
(DELEGATION OF INVESTMENT MANAGEMENT).
S 555. RELEASE OR MODIFICATION OF RESTRICTIONS  ON  MANAGEMENT,  INVEST-
         MENT, OR PURPOSE.
  (A)  IF  THE DONOR CONSENTS IN A RECORD, AN INSTITUTION MAY RELEASE OR
MODIFY, IN WHOLE OR IN PART, A RESTRICTION CONTAINED IN A  GIFT  INSTRU-
MENT ON THE MANAGEMENT, INVESTMENT, OR PURPOSE OF AN INSTITUTIONAL FUND.
A  RELEASE OR MODIFICATION MAY NOT ALLOW A FUND TO BE USED FOR A PURPOSE
OTHER THAN A CHARITABLE PURPOSE OF THE INSTITUTION.
  (B) A COURT OF COMPETENT JURISDICTION, UPON APPLICATION OF AN INSTITU-
TION, MAY MODIFY A RESTRICTION CONTAINED IN A GIFT INSTRUMENT  REGARDING
THE MANAGEMENT OR INVESTMENT OF AN INSTITUTIONAL FUND IF THE RESTRICTION
HAS  BECOME  IMPRACTICABLE  OR WASTEFUL, IF IT IMPAIRS THE MANAGEMENT OR
INVESTMENT OF THE FUND, OR IF, BECAUSE OF CIRCUMSTANCES NOT  ANTICIPATED
BY  THE DONOR, A MODIFICATION OF A RESTRICTION WILL FURTHER THE PURPOSES
OF THE FUND. THE INSTITUTION SHALL NOTIFY THE ATTORNEY  GENERAL  OF  THE
APPLICATION, AND THE ATTORNEY GENERAL MUST BE GIVEN AN OPPORTUNITY TO BE

A. 7907                             5

HEARD.  TO  THE  EXTENT  PRACTICABLE,  ANY  MODIFICATION MUST BE MADE IN
ACCORDANCE WITH THE DONOR'S PROBABLE INTENTION.
  (C) IF A PARTICULAR CHARITABLE PURPOSE OR A RESTRICTION CONTAINED IN A
GIFT  INSTRUMENT  ON  THE USE OF AN INSTITUTIONAL FUND BECOMES UNLAWFUL,
IMPRACTICABLE, IMPOSSIBLE TO  ACHIEVE,  OR  WASTEFUL,  THE  COURT,  UPON
APPLICATION OF AN INSTITUTION, MAY MODIFY THE PURPOSE OF THE FUND OR THE
RESTRICTION ON THE USE OF THE FUND IN A MANNER CONSISTENT WITH THE CHAR-
ITABLE  PURPOSES EXPRESSED IN THE GIFT INSTRUMENT. THE INSTITUTION SHALL
NOTIFY THE ATTORNEY GENERAL OF THE APPLICATION, AND THE ATTORNEY GENERAL
MUST BE GIVEN AN OPPORTUNITY TO BE HEARD.
  (D) IF AN INSTITUTION DETERMINES THAT A  RESTRICTION  CONTAINED  IN  A
GIFT INSTRUMENT ON THE MANAGEMENT, INVESTMENT, OR PURPOSE OF AN INSTITU-
TIONAL FUND IS UNLAWFUL, IMPRACTICABLE, IMPOSSIBLE TO ACHIEVE, OR WASTE-
FUL,  THE  INSTITUTION,  SIXTY  DAYS  AFTER NOTIFICATION TO THE ATTORNEY
GENERAL, MAY RELEASE OR MODIFY THE RESTRICTION, IN WHOLE OR PART, IF:
  (1) THE INSTITUTIONAL FUND SUBJECT TO  THE  RESTRICTION  HAS  A  TOTAL
VALUE  OF  LESS  THAN THE MAXIMUM AMOUNT, AS DETERMINED UNDER THIS PARA-
GRAPH;
  (2) MORE THAN TEN YEARS HAVE ELAPSED SINCE THE FUND  WAS  ESTABLISHED;
AND
  (3)  THE INSTITUTION USES THE PROPERTY IN A MANNER CONSISTENT WITH THE
CHARITABLE PURPOSES EXPRESSED IN THE GIFT INSTRUMENT.
  FOR PURPOSES OF SUBPARAGRAPH (1) OF THIS PARAGRAPH, THE MAXIMUM AMOUNT
IS THE GREATER OF (A) ONE HUNDRED THOUSAND DOLLARS AND (B)  THE  PRODUCT
OF  ONE  HUNDRED  THOUSAND  DOLLARS  AND A FRACTION (I) THE NUMERATOR OF
WHICH IS THE CPI-U FOR THE MOST  RECENT  YEAR  FOR  WHICH  IT  HAS  BEEN
PUBLISHED  PRIOR  TO  THE INCEPTION OF THE SIXTY-DAY NOTIFICATION PERIOD
AND (II) THE DENOMINATOR OF WHICH IS THE FINAL CPI-U FOR  CALENDAR  YEAR
TWO  THOUSAND  EIGHT.  FOR  THIS PURPOSE, CPI-U MEANS THE CONSUMER PRICE
INDEX FOR ALL URBAN CONSUMERS FOR THE NEW YORK-NORTHERN NEW  JERSEY-LONG
ISLAND,  NEW YORK-NEW JERSEY-CONNECTICUT-PENNSYLVANIA CONSOLIDATED AREA,
AS DETERMINED AND PUBLISHED BY THE U.S. DEPARTMENT OF LABOR,  BUREAU  OF
LABOR STATISTICS.
  (E)  FOR  PURPOSES  OF  THIS  SECTION, AN INSTITUTION MAY APPLY TO THE
FOLLOWING COURTS TO RELEASE OR MODIFY A RESTRICTION CONTAINED IN A  GIFT
INSTRUMENT:
  (1)  TO  THE SUPREME COURT OF THE JUDICIAL DISTRICT WHEREIN THE CORPO-
RATION HAS ITS OFFICE OR PRINCIPAL PLACE OF CARRYING  OUT  THE  PURPOSES
FOR WHICH IT WAS FORMED; OR
  (2) WHERE THE APPLICABLE GIFT INSTRUMENT IS A WILL, TO THE SURROGATE'S
COURT IN WHICH SUCH WILL IS PROBATED.
S 556. REVIEWING COMPLIANCE.
  COMPLIANCE WITH THIS ARTICLE SHALL BE DETERMINED IN LIGHT OF THE FACTS
AND  CIRCUMSTANCES  EXISTING AT THE TIME A DECISION IS MADE OR ACTION IS
TAKEN, AND NOT RETROSPECTIVELY.
S 557. APPLICATION TO EXISTING INSTITUTIONAL FUNDS.
  THIS ARTICLE SHALL APPLY TO INSTITUTIONAL FUNDS EXISTING ON OR  ESTAB-
LISHED  AFTER THE EFFECTIVE DATE OF THIS ARTICLE. AS APPLIED TO INSTITU-
TIONAL FUNDS EXISTING ON THE EFFECTIVE DATE OF THIS ARTICLE, THIS  ARTI-
CLE  SHALL  GOVERN ONLY DECISIONS MADE OR ACTIONS TAKEN ON OR AFTER THAT
DATE.
S 558. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE
         ACT.
  THIS ARTICLE MODIFIES, LIMITS, AND SUPERSEDES  THE  ELECTRONIC  SIGNA-
TURES  IN  GLOBAL  AND  NATIONAL COMMERCE ACT, 15 U.S.C. SECTION 7001 ET
SEQ., BUT DOES NOT MODIFY, LIMIT, OR SUPERSEDE SECTION 101 OF THAT  ACT,

A. 7907                             6

15  U.S.C.  SECTION  7001(A), OR AUTHORIZE ELECTRONIC DELIVERY OF ANY OF
THE NOTICES DESCRIBED IN SECTION 103 OF  THAT  ACT,  15  U.S.C.  SECTION
7003(B).
  S  2.  Subparagraphs  13,  14  and 17 of paragraph (a) of section 102,
section 512, paragraphs (c) and (d) of section 513, and section  522  of
the not-for-profit corporation law are REPEALED.
  S  3.  The  closing subparagraph of paragraph (a) and paragraph (b) of
section 406 of the not-for-profit corporation law, as added  by  chapter
331 of the laws of 1971, are amended to read as follows:
Except  as  provided  in  paragraph (b), this paragraph applies notwith-
standing any other provision of the certificate of incorporation or  any
direction  in [an] A GIFT instrument [referred to in section 513 (Admin-
istration of assets received for specific purposes)].
  (b) Paragraph (a) shall not apply to the extent that it conflicts with
any mandatory direction in [an]  A  GIFT  instrument  [by  which  assets
referred to in section 513 were transferred to the corporation] EXECUTED
prior  to  the  effective  date  of this section unless such conflicting
direction is  removed  as  impracticable  under  article  eight  of  the
estates,  powers  and trusts law or in any other manner provided by law.
The absence of a specific provision in the [section 513 instrument] GIFT
INSTRUMENT for the current use of the principal  of  the  fund,  or  the
presence  in such an instrument of a provision, as to the principal of a
fund, limited to the principal's being held, invested and reinvested, is
not such a conflicting mandatory direction.
  S 4. Section 406 of the not-for-profit corporation law is  amended  by
adding a new paragraph (e) to read as follows:
  (E)  FOR PURPOSES OF THIS SECTION, THE TERM GIFT INSTRUMENT SHALL HAVE
THE MEANING SET FORTH IN SECTION 551 (DEFINITIONS).
  S 5. Paragraph (b) of section 513 of  the  not-for-profit  corporation
law,  as  amended by chapter 690 of the laws of 1978, is amended to read
as follows:
  (b) Except as may be otherwise permitted under article  eight  of  the
estates,  powers and trusts law or section [522 (Release of restrictions
on use or investment)] 555 (RELEASE OR MODIFICATION OF  RESTRICTIONS  ON
MANAGEMENT, INVESTMENT, OR PURPOSE), the governing board shall apply all
assets thus received to the purposes specified in the gift instrument AS
DEFINED  IN  SECTION 551 (DEFINITIONS) and to the payment of the reason-
able and proper expenses of administration of such assets. The governing
board shall cause accurate accounts to be kept of such  assets  separate
and  apart from the accounts of other assets of the corporation.  Unless
the terms of the particular gift instrument provide otherwise, the trea-
surer shall make an annual report to the members (if there  be  members)
or to the governing board (if there be no members) concerning the assets
held  under  this  section  and  the  use made of such assets and of the
income thereof.
  S 6. Section 514 of the not-for-profit corporation law,  as  added  by
chapter 690 of the laws of 1978, is amended to read as follows:
S 514. Delegation of investment management.
  (a)  Except as otherwise provided by the applicable gift instrument AS
DEFINED IN SECTION 551 (DEFINITIONS),  the  governing  board  may  [(1)]
delegate  to its committees, officers or employees of the corporation or
the fund[, or agents, including investment counsel,]  the  authority  to
act  in  place  of the governing board in investment and reinvestment of
institutional funds[, (2) contract with independent investment advisors,
investment counsel or managers, banks, or trust companies,  so  to  act,
and (3) authorize the payment of compensation for investment advisory or

A. 7907                             7

management  services, advisors, investment counsel or managers, banks or
trust companies, so to act. Each contract pursuant to which authority is
so delegated shall provide that it may be terminated  by  the  governing
board  at  any  time,  without  penalty,  upon not more than sixty days'
notice] AS DEFINED IN SECTION 551 (DEFINITIONS).   SECTION 554    (DELE-
GATION  OF  MANAGEMENT  AND  INVESTMENT FUNCTIONS) SHALL GOVERN EXTERNAL
DELEGATION BY A GOVERNING BOARD.
  (b) The governing board shall exercise the standard of  care  required
by  section  717  (Duty  of  directors and officers) in the selection of
persons to whom authority is delegated [or with whom contracts are made]
under paragraph (a) of this section and in the  continuation  or  termi-
nation  of  such delegation [or contracts.  The governing board shall be
relieved of all liability for the investment and reinvestment of  insti-
tutional  funds  by,  and for the other acts or omissions of, persons to
whom authority is so delegated or with whom contracts are so made].    A
GOVERNING  BOARD  THAT  COMPLIES WITH SECTION 717 (DUTY OF DIRECTORS AND
OFFICERS) IS NOT LIABLE FOR THE  DECISIONS  OR  ACTIONS  OF  COMMITTEES,
OFFICERS  OR EMPLOYEES OF THE CORPORATION OR THE FUND TO WHICH THE FUNC-
TION WAS DELEGATED UNDER PARAGRAPH (A) OF THIS SECTION.
  S 7. Paragraph (a) of section 717 of  the  not-for-profit  corporation
law,  as  amended by chapter 690 of the laws of 1978, is amended to read
as follows:
  (a) Directors and officers shall discharge the duties of their respec-
tive positions in good faith and with [that degree  of  diligence,  care
and  skill  which  ordinarily  prudent  men would exercise under similar
circumstances in like positions] THE CARE AN ORDINARILY  PRUDENT  PERSON
IN  A LIKE POSITION WOULD EXERCISE UNDER SIMILAR CIRCUMSTANCES.  [In the
administration of the powers to make and retain investments pursuant  to
section 512 (Investment authority), to appropriate appreciation pursuant
to   section   513  (Administration  of  assets  received  for  specific
purposes), and to delegate] THE FACTORS SET FORTH IN  SECTION  552(E)(1)
(STANDARD  OF  CONDUCT IN MANAGING AND INVESTING AN INSTITUTIONAL FUND),
IF RELEVANT, MUST BE CONSIDERED BY A GOVERNING BOARD DELEGATING  invest-
ment  management  of institutional funds pursuant to section 514 (Deleg-
ation of investment management)[, a governing board shall consider among
other relevant considerations the long  and  short  term  needs  of  the
corporation  in  carrying  out its purposes, its present and anticipated
financial requirements, expected total return on its investments,  price
level  trends,  and  general  economic  conditions] FOR PURPOSES OF THIS
PARAGRAPH, THE TERM INSTITUTIONAL FUND IS DEFINED IN SECTION 551  (DEFI-
NITIONS).
  S  8.  Paragraphs  (c)  and (e) of subdivision 1 of section 2-b of the
religious corporations law, paragraph (c) as amended by chapter  623  of
the  laws  of 1992, paragraph (e) as added by chapter 690 of the laws of
1978, are amended to read as follows:
  (c) The following provisions of  the  not-for-profit  corporation  law
shall  not apply to religious corporations: subparagraphs (7) and (8) of
paragraph (a) of section one hundred twelve, section one  hundred  thir-
teen,  section  one  hundred  fourteen, section two hundred one, section
three hundred three, section three hundred four, section  three  hundred
five,  section  three  hundred  six,  article  four  except section four
hundred one, section five hundred fourteen, that portion of section five
hundred [twenty-two (b)] FIFTY-FIVE (B) AND SECTION FIVE HUNDRED  FIFTY-
FIVE  (C)  which  reads  "[The attorney general shall be notified of the
application and shall be given an opportunity to be heard] THE  INSTITU-
TION  SHALL  NOTIFY  THE  ATTORNEY  GENERAL  OF THE APPLICATION, AND THE

A. 7907                             8

ATTORNEY GENERAL MUST BE GIVEN AN OPPORTUNITY TO BE HEARD", section  six
hundred  five,  section  six  hundred  seven,  section six hundred nine,
section eight hundred four, article nine  except  section  nine  hundred
ten,  article  ten except as provided in section eleven hundred fifteen,
section eleven hundred two, and article fifteen except paragraph (c)  of
section fifteen hundred seven.
  (e)  No action shall be taken by the trustees of an incorporated Roman
Catholic church, or of a Ruthenian Greek Catholic church, under  section
five  hundred  [twenty-two] FIFTY-FIVE of the not-for-profit corporation
law [(Release of restrictions on use or investment)] (RELEASE OR MODIFI-
CATION OF RESTRICTIONS ON MANAGEMENT, INVESTMENT,  OR  PURPOSE)  without
the  consent  of  the  archbishop or bishop of the diocese to which such
church belongs or in case of their absence or inability to act,  without
the consent of the vicar general or administrator of such diocese.
  S  9. Paragraph (e) of section 8-1.1 of the estates, powers and trusts
law is amended by adding a new subparagraph 3 to read as follows:
  (3) THIS PARAGRAPH SHALL NOT RESTRICT IN ANY  MANNER  THE  ABILITY  TO
RELEASE  OR  MODIFY  RESTRICTIONS  RELATING TO INSTITUTIONAL FUNDS UNDER
SECTION 555 OF THE NOT-FOR-PROFIT CORPORATION LAW.
  S 10. Paragraph (j) of section 8-1.1 of the estates, powers and trusts
law is amended to read as follows:
  (j) Whenever a voluntary association or  committee  has  received,  by
public  subscription, a fund for a charitable or benevolent purpose from
more than one thousand contributors, a portion of  which  remains  unex-
pended  after the expiration of five years from the time of its receipt,
and it  appears  that  a  literal  compliance  with  the  terms  of  the
subscription  is  impracticable,  the  supreme  court  may make an order
directing that such unexpended balance be transferred for administration
and application to such domestic corporation as in the judgment  of  the
court  will  most  effectively  accomplish the general purpose for which
such fund was collected, free from any restriction, limitation or direc-
tion upon which the subscription was made; and on the transfer  of  such
fund  to the corporation designated in the order, such voluntary associ-
ation, its officers and trustees, or such  committee  and  its  officers
shall  be  fully exonerated and discharged from all liability to account
for such fund.   THIS PARAGRAPH SHALL NOT RESTRICT  IN  ANY  MANNER  THE
ABILITY  TO  RELEASE  OR  MODIFY  RESTRICTIONS RELATING TO INSTITUTIONAL
FUNDS UNDER SECTION 555 OF THE NOT-FOR-PROFIT CORPORATION LAW.
  S 11. Section 8-1.7 of the estates, powers and trusts law  is  amended
by adding a new paragraph (b) to read as follows:
  (B)  THIS  SECTION  SHALL NOT RESTRICT IN ANY MANNER THE APPROPRIATION
FOR EXPENDITURE OR ACCUMULATION OF  ENDOWMENT  FUNDS  AS  SET  FORTH  IN
SECTION 553 OF THE NOT-FOR-PROFIT CORPORATION LAW.
  S  12.  Subparagraph  1  of  paragraph  (e)  of  section 11-2.3 of the
estates, powers and trusts law, as added by chapter 609 of the  laws  of
1994, is amended to read as follows:
  (1)  the  term  "trustee" includes a personal representative, trustee,
guardian, donee of a  power  during  minority,  guardian  under  article
eighty-one  of  the  mental hygiene law, committee of the property of an
incompetent person, and conservator of the property  of  a  conservatee,
BUT  DOES NOT INCLUDE AN INSTITUTIONAL FUND AS DEFINED IN SECTION 551 OF
THE NOT-FOR-PROFIT CORPORATION LAW;
  S 13. Subdivision 1 of section 2115 of the surrogate's court procedure
act, as added by chapter 609 of the laws of 1994, is amended to read  as
follows:

A. 7907                             9

  1.  At  any time during the administration of a trust and irrespective
of the pendency of a particular proceeding, the court with  jurisdiction
of  the trust may review the reasonableness of the costs of a delegation
by the trustee under section 11-2.3 of the estates,  powers  and  trusts
law AND UNDER SECTION 554 OF THE NOT-FOR-PROFIT CORPORATION LAW.
  S 14.  This act shall take effect immediately.

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7907--A

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                             April 28, 2009
                               ___________

Introduced by M. of A. BING, ROSENTHAL -- Multi-Sponsored by -- M. of A.
  TITONE  --  read  once  and referred to the Committee on Corporations,
  Authorities and Commissions --  committee  discharged,  bill  amended,
  ordered reprinted as amended and recommitted to said committee

AN ACT to amend the not-for-profit corporation law, the religious corpo-
  rations law, the estates, powers and trusts law, the surrogate's court
  procedure act and the executive law, in relation to adopting a prudent
  management  of  institutional  funds  standard;  and to repeal certain
  provisions of the not-for-profit corporation law relating thereto

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The not-for-profit corporation law is amended by adding a
new article 5-A to read as follows:
                               ARTICLE 5-A
              PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT
SECTION 550. SHORT TITLE.
        551. DEFINITIONS.
        552. STANDARD OF CONDUCT IN MANAGING AND INVESTING  AN  INSTITU-
               TIONAL FUND.
        553. APPROPRIATION  FOR EXPENDITURE OR ACCUMULATION OF ENDOWMENT
               FUND; RULES OF CONSTRUCTION.
        554. DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.
        555. RELEASE OR  MODIFICATION  OF  RESTRICTIONS  ON  MANAGEMENT,
               INVESTMENT, OR PURPOSE.
        556. REVIEWING COMPLIANCE.
        557. APPLICATION TO EXISTING INSTITUTIONAL FUNDS.
        558. RELATION  TO  ELECTRONIC  SIGNATURES IN GLOBAL AND NATIONAL
               COMMERCE ACT.
S 550. SHORT TITLE.
  THIS ARTICLE MAY BE KNOWN AND MAY BE CITED AS THE  "NEW  YORK  PRUDENT
MANAGEMENT OF INSTITUTIONAL FUNDS ACT".

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11125-03-9
              

A. 7907--A                          2

S 551. DEFINITIONS.
  AS USED IN THIS ARTICLE:
  (A)  "CHARITABLE PURPOSE" MEANS THE RELIEF OF POVERTY, THE ADVANCEMENT
OF EDUCATION OR RELIGION, THE PROMOTION OF HEALTH, THE  PROMOTION  OF  A
GOVERNMENTAL  PURPOSE,  OR ANY OTHER PURPOSE THE ACHIEVEMENT OF WHICH IS
BENEFICIAL TO THE COMMUNITY.
  (B) "ENDOWMENT FUND" MEANS AN INSTITUTIONAL FUND OR PART THEREOF THAT,
UNDER THE TERMS OF A GIFT INSTRUMENT, IS NOT WHOLLY  EXPENDABLE  BY  THE
INSTITUTION ON A CURRENT BASIS. THE TERM DOES NOT INCLUDE ASSETS THAT AN
INSTITUTION MAY DESIGNATE AS AN ENDOWMENT FUND FOR ITS OWN USE, CONSIST-
ENT WITH THE TERMS OF THE APPLICABLE GIFT INSTRUMENT.
  (C) "GIFT INSTRUMENT" MEANS A RECORD OR RECORDS, INCLUDING AN INSTITU-
TIONAL SOLICITATION, UNDER WHICH PROPERTY IS GRANTED TO, TRANSFERRED TO,
OR HELD BY AN INSTITUTION AS AN INSTITUTIONAL FUND.
  (D)  "INSTITUTION"  MEANS:  (1)  A  PERSON,  OTHER THAN AN INDIVIDUAL,
ORGANIZED AND OPERATED EXCLUSIVELY FOR CHARITABLE PURPOSES; (2) A  TRUST
THAT HAD BOTH CHARITABLE AND NONCHARITABLE INTERESTS, AFTER ALL NONCHAR-
ITABLE  INTERESTS  HAVE  TERMINATED; OR (3) ANY CORPORATION DESCRIBED IN
SUBPARAGRAPH FIVE OF PARAGRAPH (A) OF SECTION 102 OF THIS CHAPTER.
  (E) "INSTITUTIONAL FUND" MEANS A FUND HELD BY  AN  INSTITUTION  EXCLU-
SIVELY  FOR  CHARITABLE  PURPOSES.  THIS  TERM  SHALL  NOT  INCLUDE: (1)
PROGRAM-RELATED ASSETS; (2) A FUND HELD FOR AN INSTITUTION BY A  TRUSTEE
THAT IS NOT AN INSTITUTION; OR (3) A FUND IN WHICH A BENEFICIARY THAT IS
NOT  AN  INSTITUTION  HAS AN INTEREST, OTHER THAN AN INTEREST THAT COULD
ARISE UPON VIOLATION OR FAILURE OF THE PURPOSES OF THE FUND.
  (F) "NOTICE" MEANS INFORMATION GIVEN BY AN INSTITUTION AS REQUIRED  BY
THIS  ARTICLE. AN INSTITUTION WILL BE CONSIDERED TO HAVE GIVEN NOTICE IF
NOTICE IS GIVEN PERSONALLY IN WRITING OR SENT TO  THE  RECIPIENT'S  LAST
KNOWN  ADDRESS  ON  RECORD WITH THE INSTITUTION, OR, IF NO ADDRESS IS ON
RECORD WITH THE INSTITUTION, IF THE INSTITUTION MAKES REASONABLE EFFORTS
TO ATTEMPT TO FIND AND NOTIFY THE RECIPIENT.  IF THE NOTICE  IS  MAILED,
SUCH  NOTICE  IS  GIVEN  WHEN  DEPOSITED IN THE UNITED STATES MAIL, WITH
POSTAGE THEREON PREPAID. IF THE NOTICE IS DELIVERED BY ELECTRONIC MEANS,
SUCH AS VIA FACSIMILE OR EMAIL, SUCH NOTICE IS GIVEN WHEN THE NOTICE  IS
SENT.
  (G) "PERSON" MEANS AN INDIVIDUAL, CORPORATION, BUSINESS TRUST, ESTATE,
TRUST,   PARTNERSHIP,  LIMITED  LIABILITY  COMPANY,  ASSOCIATION,  JOINT
VENTURE, PUBLIC CORPORATION,  GOVERNMENT  OR  GOVERNMENTAL  SUBDIVISION,
AGENCY, OR INSTRUMENTALITY, OR ANY OTHER LEGAL OR COMMERCIAL ENTITY.
  (H)  "PROGRAM-RELATED  ASSET" MEANS AN ASSET HELD BY AN INSTITUTION TO
ACCOMPLISH A CHARITABLE PURPOSE OF THE INSTITUTION UNDER  THE  TERMS  OF
THE GIFT INSTRUMENT BUT NOT PRIMARILY FOR INVESTMENT.
  (I)  "RECORD" MEANS INFORMATION THAT IS INSCRIBED ON A TANGIBLE MEDIUM
OR THAT IS STORED IN AN ELECTRONIC OR OTHER MEDIUM AND IS RETRIEVABLE IN
PERCEIVABLE FORM.
S 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 CHARITABLE 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.

A. 7907--A                          3

  (C) IN MANAGING AND INVESTING AN INSTITUTIONAL FUND, AN INSTITUTION:
  (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 CONDI-
TIONS; (B) THE POSSIBLE  EFFECT  OF  INFLATION  OR  DEFLATION;  (C)  THE
EXPECTED  TAX  CONSEQUENCES,  IF ANY, OF INVESTMENT DECISIONS OR STRATE-
GIES; (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  CHARITABLE
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  REASONABLY  DETERMINES  THAT,  BECAUSE  OF
SPECIAL  CIRCUMSTANCES, THE PURPOSES OF THE FUND ARE BETTER SERVED WITH-
OUT DIVERSIFICATION.
  (5) WITHIN A REASONABLE TIME AFTER RECEIVING PROPERTY, AN  INSTITUTION
SHALL  MAKE AND CARRY OUT DECISIONS CONCERNING THE RETENTION OR DISPOSI-
TION 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.
S 553. APPROPRIATION  FOR EXPENDITURE OR ACCUMULATION OF ENDOWMENT FUND;
         RULES OF CONSTRUCTION.
  (A) SUBJECT TO THE INTENT OF A DONOR EXPRESSED IN THE GIFT INSTRUMENT,
AN INSTITUTION MAY APPROPRIATE FOR EXPENDITURE OR ACCUMULATE SO MUCH  OF
AN ENDOWMENT FUND AS THE INSTITUTION DETERMINES IS PRUDENT FOR THE USES,
BENEFITS,  PURPOSES, AND DURATION FOR WHICH THE ENDOWMENT FUND IS ESTAB-
LISHED. UNLESS STATED OTHERWISE IN THE GIFT INSTRUMENT, THE ASSETS IN AN
ENDOWMENT  FUND  ARE  DONOR-RESTRICTED  ASSETS  UNTIL  APPROPRIATED  FOR
EXPENDITURE BY THE INSTITUTION. IN MAKING A DETERMINATION TO APPROPRIATE
OR  ACCUMULATE,  THE  INSTITUTION SHALL ACT IN GOOD FAITH, WITH THE CARE
THAT AN ORDINARILY PRUDENT PERSON IN  A  LIKE  POSITION  WOULD  EXERCISE
UNDER  SIMILAR  CIRCUMSTANCES,  AND  SHALL  CONSIDER,  IF  RELEVANT, THE
FOLLOWING FACTORS:

A. 7907--A                          4

  (1) THE DURATION AND PRESERVATION OF THE ENDOWMENT FUND;
  (2) THE PURPOSES OF THE INSTITUTION AND THE ENDOWMENT FUND;
  (3) GENERAL ECONOMIC CONDITIONS;
  (4) THE POSSIBLE EFFECT OF INFLATION OR DEFLATION;
  (5)  THE  EXPECTED  TOTAL  RETURN  FROM INCOME AND THE APPRECIATION OF
INVESTMENTS;
  (6) OTHER RESOURCES OF THE INSTITUTION; AND
  (7) THE INVESTMENT POLICY OF THE INSTITUTION.
  (B) TO LIMIT THE AUTHORITY TO APPROPRIATE FOR EXPENDITURE  OR  ACCUMU-
LATE UNDER PARAGRAPH (A) OF THIS SECTION, A GIFT INSTRUMENT MUST SPECIF-
ICALLY STATE THE LIMITATION.  TERMS IN A GIFT INSTRUMENT SETTING FORTH A
SPECIFIC  SPENDING  LEVEL,  RATE,  OR AMOUNT, OR EXPLICITLY MODIFYING OR
OVERRIDING THE PROVISIONS OF PARAGRAPH (A) OF THIS SECTION,  WILL  LIMIT
THE AUTHORITY OF THE INSTITUTION TO APPROPRIATE FOR EXPENDITURE OR ACCU-
MULATE UNDER PARAGRAPH (A) OF THIS SECTION.
  (C)  TERMS IN A GIFT INSTRUMENT DESIGNATING A GIFT AS AN ENDOWMENT, OR
A DIRECTION  OR  AUTHORIZATION  IN  THE  GIFT  INSTRUMENT  TO  USE  ONLY
"INCOME,"  "INTEREST,"  "DIVIDENDS,"  OR "RENTS, ISSUES, OR PROFITS," OR
"TO PRESERVE THE PRINCIPAL INTACT," OR WORDS OF SIMILAR IMPORT:
  (1) CREATE AN  ENDOWMENT  FUND  OF  PERMANENT  DURATION  UNLESS  OTHER
LANGUAGE  IN  THE  GIFT INSTRUMENT LIMITS THE DURATION OR PURPOSE OF THE
FUND; AND
  (2) DO NOT OTHERWISE LIMIT THE AUTHORITY TO APPROPRIATE  FOR  EXPENDI-
TURE OR ACCUMULATE UNDER PARAGRAPH (A) OF THIS SECTION.
  (D)  (1)  WITH RESPECT TO A GIFT INSTRUMENT DATED BEFORE THE EFFECTIVE
DATE OF THIS ARTICLE, AN INSTITUTION MUST PROVIDE NINETY DAYS NOTICE  TO
THE  DONOR,  IF  THE DONOR IS THEN LIVING AND CAPABLE OF IDENTIFICATION,
BEFORE APPLYING PARAGRAPH (A) OF THIS SECTION FOR THE FIRST TIME, DURING
WHICH TIME THE DONOR MAY, WITH THE CONSENT OF THE INSTITUTION, AMEND THE
GIFT INSTRUMENT TO PROHIBIT THE APPLICATION OF  PARAGRAPH  (A)  OF  THIS
SECTION.  IF THE DONOR DOES NOT RESPOND WITHIN NINETY DAYS FROM THE DATE
NOTICE WAS GIVEN, PARAGRAPH (A) OF THIS SECTION MAY BE APPLIED.
  (2) FOR PURPOSES OF THIS  PARAGRAPH,  "DONOR"  MEANS  THE  PERSON  WHO
GRANTS  OR  TRANSFERS  PROPERTY  TO  AN  INSTITUTION  PURSUANT TO A GIFT
INSTRUMENT, OR A PERSON DESIGNATED IN THE APPLICABLE GIFT INSTRUMENT  TO
ACT  IN  THE  PLACE  OF  THE  DONOR,  BUT DOES NOT OTHERWISE INCLUDE THE
PERSON'S EXECUTORS, HEIRS, SUCCESSORS, ASSIGNS, TRANSFEREES, OR  DISTRI-
BUTEES.
  (3) THIS PARAGRAPH SHALL NOT APPLY: (A) IF THE GIFT INSTRUMENT PERMITS
APPROPRIATION FOR EXPENDITURE FROM THE ENDOWMENT FUND WITHOUT REGARD FOR
THE  FUND'S  HISTORIC DOLLAR VALUE; OR (B) TO FUNDS RECEIVED AS A RESULT
OF AN INSTITUTIONAL SOLICITATION WITHOUT A SEPARATE COMMUNICATION BY THE
DONOR EXPRESSING A RESTRICTION ON THE USE OF FUNDS.
  (E) WHEN AN INSTITUTION ACTS PURSUANT TO PARAGRAPH (A) OR (D) OF  THIS
SECTION, IT SHALL KEEP A RECORD OF SUCH ACTION.
S 554. DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.
  (A)  SUBJECT TO ANY SPECIFIC LIMITATION SET FORTH IN A GIFT INSTRUMENT
OR IN LAW OTHER THAN THIS ARTICLE, AN INSTITUTION  MAY  DELEGATE  TO  AN
EXTERNAL AGENT THE MANAGEMENT AND INVESTMENT OF AN INSTITUTIONAL FUND TO
THE  EXTENT  THAT  AN  INSTITUTION  COULD  PRUDENTLY  DELEGATE UNDER THE
CIRCUMSTANCES. AN INSTITUTION SHALL ACT IN GOOD  FAITH,  WITH  THE  CARE
THAT  AN  ORDINARILY  PRUDENT  PERSON  IN A LIKE POSITION WOULD EXERCISE
UNDER SIMILAR CIRCUMSTANCES, IN:
  (1) SELECTING AN AGENT;

A. 7907--A                          5

  (2) ESTABLISHING THE SCOPE AND TERMS OF THE DELEGATION, INCLUDING  THE
PAYMENT OF COMPENSATION, CONSISTENT WITH THE PURPOSES OF THE INSTITUTION
AND THE INSTITUTIONAL FUND; AND
  (3) PERIODICALLY REVIEWING THE AGENT'S ACTIONS IN ORDER TO MONITOR THE
AGENT'S  PERFORMANCE  AND  COMPLIANCE  WITH  THE  SCOPE AND TERMS OF THE
DELEGATION.
  (B) IN PERFORMING A DELEGATED FUNCTION, AN AGENT OWES A  DUTY  TO  THE
INSTITUTION  TO  EXERCISE  REASONABLE  CARE TO COMPLY WITH THE SCOPE AND
TERMS OF THE DELEGATION.
  (C) AN INSTITUTION THAT COMPLIES WITH PARAGRAPH (A) OF THIS SECTION IS
NOT LIABLE FOR THE DECISIONS OR ACTIONS OF AN AGENT TO WHICH  THE  FUNC-
TION WAS DELEGATED.
  (D)  BY  ACCEPTING  DELEGATION  OF A MANAGEMENT OR INVESTMENT FUNCTION
FROM AN INSTITUTION THAT IS SUBJECT TO THE LAWS OF THIS STATE, AN  AGENT
SUBMITS  TO  THE  JURISDICTION  OF  THE  COURTS  OF  THIS  STATE  IN ALL
PROCEEDINGS ARISING FROM OR RELATED TO THE DELEGATION OR THE PERFORMANCE
OF THE DELEGATED FUNCTION.
  (E) EACH CONTRACT, IF ANY, PURSUANT TO WHICH AUTHORITY IS SO DELEGATED
SHALL PROVIDE THAT IT MAY BE TERMINATED BY THE INSTITUTION AT ANY  TIME,
WITHOUT PENALTY, UPON NOT MORE THAN SIXTY DAYS NOTICE.
  (F) AN INSTITUTION MAY DELEGATE MANAGEMENT AND INVESTMENT FUNCTIONS TO
ITS COMMITTEES, OFFICERS, OR EMPLOYEES AS AUTHORIZED BY THE LAWS OF THIS
STATE  OTHER THAN THIS ARTICLE, AS SET FORTH IN, INTER ALIA, SECTION 514
(DELEGATION OF INVESTMENT MANAGEMENT).
  (G) NOTHING IN THIS ARTICLE SHALL IMPAIR THE OPERATION OF SECTION  717
(DUTY OF DIRECTORS AND OFFICERS).
S 555. RELEASE  OR  MODIFICATION  OF RESTRICTIONS ON MANAGEMENT, INVEST-
         MENT, OR PURPOSE.
  (A) IF THE DONOR CONSENTS IN A RECORD, AN INSTITUTION MAY  RELEASE  OR
MODIFY,  IN  WHOLE OR IN PART, A RESTRICTION CONTAINED IN A GIFT INSTRU-
MENT ON THE MANAGEMENT, INVESTMENT, OR PURPOSE OF AN INSTITUTIONAL FUND.
A RELEASE OR MODIFICATION MAY NOT ALLOW A FUND TO BE USED FOR A  PURPOSE
OTHER THAN A CHARITABLE PURPOSE OF THE INSTITUTION.
  (B) A COURT OF COMPETENT JURISDICTION, UPON APPLICATION OF AN INSTITU-
TION,  MAY MODIFY A RESTRICTION CONTAINED IN A GIFT INSTRUMENT REGARDING
THE MANAGEMENT OR INVESTMENT OF AN INSTITUTIONAL FUND IF THE RESTRICTION
HAS BECOME IMPRACTICABLE OR WASTEFUL, IF IT IMPAIRS  THE  MANAGEMENT  OR
INVESTMENT  OF THE FUND, OR IF, BECAUSE OF CIRCUMSTANCES NOT ANTICIPATED
BY THE DONOR, A MODIFICATION OF A RESTRICTION WILL FURTHER THE  PURPOSES
OF  THE  FUND.  THE INSTITUTION SHALL NOTIFY THE ATTORNEY GENERAL OF THE
APPLICATION, AND THE ATTORNEY GENERAL MUST BE GIVEN AN OPPORTUNITY TO BE
HEARD. TO THE EXTENT PRACTICABLE,  ANY  MODIFICATION  MUST  BE  MADE  IN
ACCORDANCE WITH THE DONOR'S PROBABLE INTENTION.
  (C)  IF  A  PARTICULAR  PURPOSE  OR  A RESTRICTION CONTAINED IN A GIFT
INSTRUMENT ON THE USE OF AN INSTITUTIONAL FUND BECOMES UNLAWFUL, IMPRAC-
TICABLE, IMPOSSIBLE TO ACHIEVE, OR WASTEFUL, THE COURT, UPON APPLICATION
OF AN INSTITUTION, MAY MODIFY THE PURPOSE OF THE FUND OR THE RESTRICTION
ON THE USE OF  THE  FUND  IN  A  MANNER  CONSISTENT  WITH  THE  PURPOSES
EXPRESSED  IN  THE  GIFT  INSTRUMENT.  THE  INSTITUTION SHALL NOTIFY THE
ATTORNEY GENERAL OF THE APPLICATION, AND THE ATTORNEY GENERAL  SHALL  BE
GIVEN AN OPPORTUNITY TO BE HEARD.
  (D)(1)  IF AN INSTITUTION DETERMINES THAT A RESTRICTION CONTAINED IN A
GIFT INSTRUMENT ON THE MANAGEMENT, INVESTMENT, OR PURPOSE OF AN INSTITU-
TIONAL FUND IS UNLAWFUL, IMPRACTICABLE, IMPOSSIBLE TO ACHIEVE, OR WASTE-
FUL, THE INSTITUTION, NINETY DAYS AFTER  NOTIFICATION  TO  THE  ATTORNEY
GENERAL, MAY RELEASE OR MODIFY THE RESTRICTION, IN WHOLE OR PART, IF:

A. 7907--A                          6

  (A)  THE  INSTITUTIONAL  FUND  SUBJECT  TO THE RESTRICTION HAS A TOTAL
VALUE OF LESS THAN TWO HUNDRED FIFTY THOUSAND DOLLARS;
  (B)  MORE  THAN TEN YEARS HAVE ELAPSED SINCE THE FUND WAS ESTABLISHED;
AND
  (C) THE INSTITUTION USES THE PROPERTY IN A MANNER CONSISTENT WITH  THE
CHARITABLE PURPOSES EXPRESSED IN THE GIFT INSTRUMENT.
  (2)  NOTICE  TO THE ATTORNEY GENERAL SHALL CONTAIN: (A) AN EXPLANATION
OF (I) THE INSTITUTION'S DETERMINATION THAT THE  RESTRICTION  MEETS  THE
REQUIREMENTS  SET  FORTH  IN SUBPARAGRAPH ONE OF THIS PARAGRAPH AND (II)
THE PROPOSED RELEASE OR MODIFICATION; AND (B) A COPY OF A RECORD OF  THE
INSTITUTION APPROVING THE RELEASE OR MODIFICATION.
  (3)  IF  THE  ATTORNEY  GENERAL DOES NOT NOTIFY THE INSTITUTION WITHIN
NINETY DAYS, THE INSTITUTION MAY PROCEED WITH THE RELEASE  OR  MODIFICA-
TION.
  (4)  NOTICE  SHALL  ALSO BE GIVEN TO THE DONOR, AS DEFINED IN SUBPARA-
GRAPH TWO OF PARAGRAPH (D) OF SECTION 553 (APPROPRIATION FOR EXPENDITURE
OR ACCUMULATION OF ENDOWMENT FUND; RULES OF CONSTRUCTION), IF LIVING AND
CAPABLE OF IDENTIFICATION, PROVIDED, HOWEVER, THAT SUCH NOTICE SHALL NOT
BE REQUIRED FOR FUNDS DESCRIBED IN CLAUSE (B) OF SUBPARAGRAPH  THREE  OF
PARAGRAPH  (D)  OF SECTION 553 (APPROPRIATION FOR EXPENDITURE OR ACCUMU-
LATION OF ENDOWMENT FUND; RULES OF CONSTRUCTION).
  (E) FOR PURPOSES OF THIS SECTION, AN  INSTITUTION  MAY  APPLY  TO  THE
FOLLOWING  COURTS TO RELEASE OR MODIFY A RESTRICTION CONTAINED IN A GIFT
INSTRUMENT:
  (1) TO THE SUPREME COURT OF THE JUDICIAL DISTRICT WHEREIN  THE  CORPO-
RATION  HAS  ITS  OFFICE OR PRINCIPAL PLACE OF CARRYING OUT THE PURPOSES
FOR WHICH IT WAS FORMED; OR
  (2) WHERE THE APPLICABLE GIFT INSTRUMENT IS A WILL, TO THE SURROGATE'S
COURT IN WHICH SUCH WILL IS PROBATED.
  (F) THIS SECTION SHALL NOT LIMIT THE APPLICATION OF THE DOCTRINE OF CY
PRES.
S 556. REVIEWING COMPLIANCE.
  COMPLIANCE WITH THIS ARTICLE SHALL BE DETERMINED IN LIGHT OF THE FACTS
AND CIRCUMSTANCES EXISTING AT THE TIME A DECISION IS MADE OR  ACTION  IS
TAKEN, AND NOT RETROSPECTIVELY.
S 557. APPLICATION TO EXISTING INSTITUTIONAL FUNDS.
  THIS  ARTICLE SHALL APPLY TO INSTITUTIONAL FUNDS EXISTING ON OR ESTAB-
LISHED AFTER THE EFFECTIVE DATE OF THIS ARTICLE. AS APPLIED TO  INSTITU-
TIONAL  FUNDS EXISTING ON THE EFFECTIVE DATE OF THIS ARTICLE, THIS ARTI-
CLE SHALL GOVERN ONLY DECISIONS MADE OR ACTIONS TAKEN ON OR  AFTER  THAT
DATE.
S 558. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE
         ACT.
  THIS  ARTICLE  MODIFIES,  LIMITS, AND SUPERSEDES THE ELECTRONIC SIGNA-
TURES IN GLOBAL AND NATIONAL COMMERCE ACT, 15  U.S.C.  SECTION  7001  ET
SEQ.,  BUT DOES NOT MODIFY, LIMIT, OR SUPERSEDE SECTION 101 OF THAT ACT,
15 U.S.C. SECTION 7001(A), OR AUTHORIZE ELECTRONIC DELIVERY  OF  ANY  OF
THE  NOTICES  DESCRIBED  IN  SECTION  103 OF THAT ACT, 15 U.S.C. SECTION
7003(B).
  S 2. Subparagraphs 13, 14 and 17 of  paragraph  (a)  of  section  102,
section  512,  paragraphs (c) and (d) of section 513, and section 522 of
the not-for-profit corporation law are REPEALED.
  S 3. The closing subparagraph of paragraph (a) and  paragraph  (b)  of
section  406  of the not-for-profit corporation law, as added by chapter
331 of the laws of 1971, are amended to read as follows:

A. 7907--A                          7

Except as provided in paragraph (b),  this  paragraph  applies  notwith-
standing  any other provision of the certificate of incorporation or any
direction in [an] A GIFT instrument [referred to in section 513  (Admin-
istration of assets received for specific purposes)].
  (b) Paragraph (a) shall not apply to the extent that it conflicts with
any  mandatory  direction  in  [an]  A  GIFT instrument [by which assets
referred to in section 513 were transferred to the corporation] EXECUTED
prior to the effective date of  this  section  unless  such  conflicting
direction  is  removed  as  impracticable  under  article  eight  of the
estates, powers and trusts law or in any other manner provided  by  law.
The absence of a specific provision in the [section 513 instrument] GIFT
INSTRUMENT  for  the  current  use  of the principal of the fund, or the
presence in such an instrument of a provision, as to the principal of  a
fund, limited to the principal's being held, invested and reinvested, is
not such a conflicting mandatory direction.
  S  4.  Section 406 of the not-for-profit corporation law is amended by
adding a new paragraph (e) to read as follows:
  (E) FOR PURPOSES OF THIS SECTION, THE TERM GIFT INSTRUMENT SHALL  HAVE
THE MEANING SET FORTH IN SECTION 551 (DEFINITIONS).
  S  5.  Paragraph  (b) of section 513 of the not-for-profit corporation
law, as amended by chapter 690 of the laws of 1978, is amended  to  read
as follows:
  (b)  Except  as  may be otherwise permitted under article eight of the
estates, powers and trusts law or section [522 (Release of  restrictions
on  use  or investment)] 555 (RELEASE OR MODIFICATION OF RESTRICTIONS ON
MANAGEMENT, INVESTMENT, OR PURPOSE), the governing board shall apply all
assets thus received to the purposes specified in the gift instrument AS
DEFINED IN SECTION 551 (DEFINITIONS) and to the payment of  the  reason-
able and proper expenses of administration of such assets. The governing
board  shall  cause accurate accounts to be kept of such assets separate
and apart from the accounts of other assets of the corporation.   Unless
the terms of the particular gift instrument provide otherwise, the trea-
surer  shall  make an annual report to the members (if there be members)
or to the governing board (if there be no members) concerning the assets
held under this section and the use made  of  such  assets  and  of  the
income thereof.
  S  6.  Paragraph  (a) of section 514 of the not-for-profit corporation
law, as added by chapter 690 of the laws of 1978, is amended to read  as
follows:
  (a)  Except as otherwise provided by the applicable gift instrument AS
DEFINED IN SECTION 551 (DEFINITIONS),  the  governing  board  may  [(1)]
delegate  to its committees, officers or employees of the corporation or
the fund[, or agents, including investment counsel,]  the  authority  to
act  in  place  of the governing board in investment and reinvestment of
institutional funds[, (2) contract with independent investment advisors,
investment counsel or managers, banks, or trust companies,  so  to  act,
and (3) authorize the payment of compensation for investment advisory or
management  services, advisors, investment counsel or managers, banks or
trust companies, so to act. Each contract pursuant to which authority is
so delegated shall provide that it may be terminated  by  the  governing
board  at  any  time,  without  penalty,  upon not more than sixty days'
notice] AS DEFINED IN SECTION 551 (DEFINITIONS).   SECTION 554    (DELE-
GATION  OF  MANAGEMENT  AND  INVESTMENT FUNCTIONS) SHALL GOVERN EXTERNAL
DELEGATION BY A GOVERNING BOARD.

A. 7907--A                          8

  S 7. Paragraph (a) of section 717 of  the  not-for-profit  corporation
law,  as  amended by chapter 690 of the laws of 1978, is amended to read
as follows:
  (a) Directors and officers shall discharge the duties of their respec-
tive  positions  in  good faith and with [that degree of diligence, care
and skill which ordinarily prudent  men  would  exercise  under  similar
circumstances  in  like positions] THE CARE AN ORDINARILY PRUDENT PERSON
IN A LIKE POSITION WOULD EXERCISE UNDER SIMILAR CIRCUMSTANCES.  [In  the
administration  of the powers to make and retain investments pursuant to
section 512 (Investment authority), to appropriate appreciation pursuant
to  section  513  (Administration  of  assets  received   for   specific
purposes), and to delegate] THE FACTORS SET FORTH IN SUBPARAGRAPH ONE OF
PARAGRAPH  (E)  OF  SECTION  552  (STANDARD  OF  CONDUCT IN MANAGING AND
INVESTING AN INSTITUTIONAL FUND), IF RELEVANT, MUST BE CONSIDERED  BY  A
GOVERNING  BOARD DELEGATING investment management of institutional funds
pursuant to  section  514  (Delegation  of  investment  management)[,  a
governing  board  shall consider among other relevant considerations the
long and short term  needs  of  the  corporation  in  carrying  out  its
purposes,  its  present and anticipated financial requirements, expected
total return on its investments, price level trends, and general econom-
ic conditions] FOR PURPOSES OF THIS PARAGRAPH,  THE  TERM  INSTITUTIONAL
FUND IS DEFINED IN SECTION 551 (DEFINITIONS).
  S  8.  Paragraphs  (c)  and (e) of subdivision 1 of section 2-b of the
religious corporations law, paragraph (c) as amended by chapter  623  of
the  laws  of 1992, paragraph (e) as added by chapter 690 of the laws of
1978, are amended to read as follows:
  (c) The following provisions of  the  not-for-profit  corporation  law
shall  not apply to religious corporations: subparagraphs (7) and (8) of
paragraph (a) of section one hundred twelve, section one  hundred  thir-
teen,  section  one  hundred  fourteen, section two hundred one, section
three hundred three, section three hundred four, section  three  hundred
five,  section  three  hundred  six,  article  four  except section four
hundred one, section five hundred fourteen, that portion of section five
hundred [twenty-two (b)] FIFTY-FIVE (B) AND SECTION FIVE HUNDRED  FIFTY-
FIVE  (C)  which  reads  "[The attorney general shall be notified of the
application and shall be given an opportunity to be heard] THE  INSTITU-
TION  SHALL  NOTIFY  THE  ATTORNEY  GENERAL  OF THE APPLICATION, AND THE
ATTORNEY GENERAL MUST BE GIVEN AN OPPORTUNITY TO BE HEARD", section  six
hundred  five,  section  six  hundred  seven,  section six hundred nine,
section eight hundred four, article nine  except  section  nine  hundred
ten,  article  ten except as provided in section eleven hundred fifteen,
section eleven hundred two, and article fifteen except paragraph (c)  of
section fifteen hundred seven.
  (e)  No action shall be taken by the trustees of an incorporated Roman
Catholic church, or of a Ruthenian Greek Catholic church, under  section
five  hundred  [twenty-two] FIFTY-FIVE of the not-for-profit corporation
law [(Release of restrictions on use or investment)] (RELEASE OR MODIFI-
CATION OF RESTRICTIONS ON MANAGEMENT, INVESTMENT,  OR  PURPOSE)  without
the  consent  of  the  archbishop or bishop of the diocese to which such
church belongs or in case of their absence or inability to act,  without
the consent of the vicar general or administrator of such diocese.
  S  9. Paragraph (e) of section 8-1.1 of the estates, powers and trusts
law, as amended by chapter 686 of the laws of 1967, is amended  to  read
as follows:
  (e)  Any accumulation of income from property subject to a disposition
in trust for a religious, charitable, educational or benevolent purpose,

A. 7907--A                          9

or otherwise acquired by such trust, shall in  all  respects,  including
its  reasonableness,  amount and duration, be within the jurisdiction of
the supreme court or the surrogate's court, as the case may be. In exer-
cising  such  jurisdiction,  (1)  any accumulation of income which might
otherwise be applied for the purposes of the trust may be prohibited  or
limited,  despite  a valid direction therefor in the trust instrument or
authority therefor under 8-1.7 and  (2)  such  an  accumulation  may  be
authorized  by  order  of  the  court despite the absence of a direction
therefor in the trust instrument.  THIS PARAGRAPH SHALL NOT RESTRICT  IN
ANY  MANNER  THE  ABILITY  TO RELEASE OR MODIFY RESTRICTIONS RELATING TO
INSTITUTIONAL FUNDS UNDER SECTION 555 OF THE NOT-FOR-PROFIT  CORPORATION
LAW.
  S 10. Paragraph (j) of section 8-1.1 of the estates, powers and trusts
law is amended to read as follows:
  (j)  Whenever  a  voluntary  association or committee has received, by
public subscription, a fund for a charitable or benevolent purpose  from
more  than  one  thousand contributors, a portion of which remains unex-
pended after the expiration of five years from the time of its  receipt,
and  it  appears  that  a  literal  compliance  with  the  terms  of the
subscription is impracticable, the  supreme  court  may  make  an  order
directing that such unexpended balance be transferred for administration
and  application  to such domestic corporation as in the judgment of the
court will most effectively accomplish the  general  purpose  for  which
such fund was collected, free from any restriction, limitation or direc-
tion  upon  which the subscription was made; and on the transfer of such
fund to the corporation designated in the order, such voluntary  associ-
ation,  its  officers  and  trustees, or such committee and its officers
shall be fully exonerated and discharged from all liability  to  account
for  such  fund.    THIS  PARAGRAPH SHALL NOT RESTRICT IN ANY MANNER THE
ABILITY TO RELEASE OR  MODIFY  RESTRICTIONS  RELATING  TO  INSTITUTIONAL
FUNDS UNDER SECTION 555 OF THE NOT-FOR-PROFIT CORPORATION LAW.
  S  11.  Section 8-1.7 of the estates, powers and trusts law is amended
by adding a new paragraph (b) to read as follows:
  (B) THIS SECTION SHALL NOT RESTRICT IN ANY  MANNER  THE  APPROPRIATION
FOR  EXPENDITURE  OR  ACCUMULATION  OF  ENDOWMENT  FUNDS AS SET FORTH IN
SECTION 553 OF THE NOT-FOR-PROFIT CORPORATION LAW.
  S 12. Subparagraph 1  of  paragraph  (e)  of  section  11-2.3  of  the
estates,  powers  and trusts law, as added by chapter 609 of the laws of
1994, is amended to read as follows:
  (1) the term "trustee" includes a  personal  representative,  trustee,
guardian,  donee  of  a  power  during  minority, guardian under article
eighty-one of the mental hygiene law, committee of the  property  of  an
incompetent  person,  and  conservator of the property of a conservatee,
BUT DOES NOT INCLUDE AN INSTITUTIONAL FUND AS DEFINED IN SECTION 551  OF
THE NOT-FOR-PROFIT CORPORATION LAW;
  S 13. Subdivision 1 of section 2115 of the surrogate's court procedure
act,  as added by chapter 609 of the laws of 1994, is amended to read as
follows:
  1. At any time during the administration of a trust  and  irrespective
of  the pendency of a particular proceeding, the court with jurisdiction
of the trust may review the reasonableness of the costs of a  delegation
by  the  trustee  under section 11-2.3 of the estates, powers and trusts
law AND UNDER SECTION 554 OF THE NOT-FOR-PROFIT CORPORATION LAW.
  S 14. Subdivision 2 of section 174-b of the executive law, as  amended
by chapter 43 of the laws of 2002, is amended to read as follows:

A. 7907--A                         10

  2.  Any  solicitation used by or on behalf of any charitable organiza-
tion shall provide a clear description of the  programs  and  activities
for which it has requested and has expended or will expend contributions
or  shall  include  therein a statement that, upon request, a person may
obtain from the organization such a description.  IF THE SOLICITATION IS
BY AN INSTITUTION SUBJECT TO ARTICLE FIVE-A OF THE NOT-FOR-PROFIT CORPO-
RATION  LAW, AND IS FOR AN ENDOWMENT FUND, THE SOLICITATION MUST INCLUDE
A STATEMENT THAT, UNLESS OTHERWISE RESTRICTED  BY  THE  GIFT  INSTRUMENT
PURSUANT  TO  PARAGRAPH  (B)  OF SECTION FIVE HUNDRED FIFTY-THREE OF THE
NOT-FOR-PROFIT CORPORATION LAW, THE INSTITUTION MAY EXPEND SO MUCH OF AN
ENDOWMENT FUND AS IT DEEMS PRUDENT AFTER  CONSIDERING  THE  FACTORS  SET
FORTH  IN  PARAGRAPH  (A)  OF  SECTION  FIVE  HUNDRED FIFTY-THREE OF THE
NOT-FOR-PROFIT CORPORATION LAW.
  S 15. If any clause, sentence, paragraph, subdivision, section or part
of this act shall be adjudged by any court of competent jurisdiction  to
be  invalid,  such judgement shall not affect, impair, or invalidate the
remainder thereof, but shall be confined in its operation to the clause,
sentence, paragraph,  subdivision,  section  or  part  thereof  directly
involved  in  the  controversy  in  which such judgement shall have been
rendered. It is hereby declared to be the intent of the legislature that
this act would have been enacted even if such invalid provisions had not
been included herein.
  S 16. This act shall take  effect  on  the  first  of  September  next
succeeding the date on which it shall have become a law.

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7907--B

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                             April 28, 2009
                               ___________

Introduced by M. of A. BING, ROSENTHAL, BRODSKY -- Multi-Sponsored by --
  M.  of A.  TITONE -- read once and referred to the Committee on Corpo-
  rations, Authorities and Commissions  --  committee  discharged,  bill
  amended,  ordered reprinted as amended and recommitted to said commit-
  tee -- reported and referred to the Committee on  Codes  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN ACT to amend the not-for-profit corporation law, the religious corpo-
  rations law, the estates, powers and trusts law, the surrogate's court
  procedure act and the executive law, in relation to adopting a prudent
  management  of  institutional  funds  standard;  and to repeal certain
  provisions of the not-for-profit corporation law relating thereto

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The not-for-profit corporation law is amended by adding a
new article 5-A to read as follows:
                               ARTICLE 5-A
              PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT
SECTION 550. SHORT TITLE.
        551. DEFINITIONS.
        552. STANDARD OF CONDUCT IN MANAGING AND INVESTING  AN  INSTITU-
               TIONAL FUND.
        553. APPROPRIATION  FOR EXPENDITURE OR ACCUMULATION OF ENDOWMENT
               FUND; RULES OF CONSTRUCTION.
        554. DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.
        555. RELEASE OR  MODIFICATION  OF  RESTRICTIONS  ON  MANAGEMENT,
               INVESTMENT, OR PURPOSE.
        556. REVIEWING COMPLIANCE.
        557. APPLICATION TO EXISTING INSTITUTIONAL FUNDS.
        558. RELATION  TO  ELECTRONIC  SIGNATURES IN GLOBAL AND NATIONAL
               COMMERCE ACT.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11125-07-9
              

A. 7907--B                          2

S 550. SHORT TITLE.
  THIS  ARTICLE  MAY  BE KNOWN AND MAY BE CITED AS THE "NEW YORK PRUDENT
MANAGEMENT OF INSTITUTIONAL FUNDS ACT".
S 551. DEFINITIONS.
  AS USED IN THIS ARTICLE:
  (A) "CHARITABLE PURPOSE" MEANS THE RELIEF OF POVERTY, THE  ADVANCEMENT
OF  EDUCATION  OR  RELIGION, THE PROMOTION OF HEALTH, THE PROMOTION OF A
GOVERNMENTAL PURPOSE, OR ANY OTHER PURPOSE THE ACHIEVEMENT OF  WHICH  IS
BENEFICIAL TO THE COMMUNITY.
  (B) "ENDOWMENT FUND" MEANS AN INSTITUTIONAL FUND OR PART THEREOF THAT,
UNDER  THE  TERMS  OF A GIFT INSTRUMENT, IS NOT WHOLLY EXPENDABLE BY THE
INSTITUTION ON A CURRENT BASIS. THE TERM DOES NOT INCLUDE ASSETS THAT AN
INSTITUTION MAY DESIGNATE AS AN ENDOWMENT FUND FOR ITS OWN USE, CONSIST-
ENT WITH THE TERMS OF THE APPLICABLE GIFT INSTRUMENT.
  (C) "GIFT INSTRUMENT" MEANS A RECORD OR RECORDS, INCLUDING AN INSTITU-
TIONAL SOLICITATION, UNDER WHICH PROPERTY IS GRANTED TO, TRANSFERRED TO,
OR HELD BY AN INSTITUTION AS AN INSTITUTIONAL FUND.
  (D) "INSTITUTION" MEANS: (1)  A  PERSON,  OTHER  THAN  AN  INDIVIDUAL,
ORGANIZED  AND OPERATED EXCLUSIVELY FOR CHARITABLE PURPOSES; (2) A TRUST
THAT HAD BOTH CHARITABLE AND NONCHARITABLE INTERESTS, AFTER ALL NONCHAR-
ITABLE INTERESTS HAVE TERMINATED; OR (3) ANY  CORPORATION  DESCRIBED  IN
SUBPARAGRAPH FIVE OF PARAGRAPH (A) OF SECTION 102 (DEFINITIONS).
  (E)  "INSTITUTIONAL  FUND"  MEANS A FUND HELD BY AN INSTITUTION.  THIS
TERM SHALL NOT INCLUDE: (1) PROGRAM-RELATED ASSETS; (2) A FUND HELD  FOR
AN INSTITUTION BY A TRUSTEE THAT IS NOT AN INSTITUTION; OR (3) A FUND IN
WHICH  A  BENEFICIARY  THAT IS NOT AN INSTITUTION HAS AN INTEREST, OTHER
THAN AN INTEREST THAT COULD ARISE  UPON  VIOLATION  OR  FAILURE  OF  THE
PURPOSES OF THE FUND.
  (F)  "NOTICE" MEANS INFORMATION GIVEN BY AN INSTITUTION AS REQUIRED BY
THIS ARTICLE. AN INSTITUTION WILL BE CONSIDERED TO HAVE GIVEN NOTICE  IF
NOTICE  IS  GIVEN  PERSONALLY IN WRITING OR SENT TO THE RECIPIENT'S LAST
KNOWN ADDRESS ON RECORD WITH THE INSTITUTION, OR, IF NO  ADDRESS  IS  ON
RECORD WITH THE INSTITUTION, IF THE INSTITUTION MAKES REASONABLE EFFORTS
TO  ATTEMPT  TO FIND AND NOTIFY THE RECIPIENT.  IF THE NOTICE IS MAILED,
SUCH NOTICE IS GIVEN WHEN DEPOSITED IN  THE  UNITED  STATES  MAIL,  WITH
POSTAGE THEREON PREPAID. IF THE NOTICE IS DELIVERED BY ELECTRONIC MEANS,
SUCH  AS VIA FACSIMILE OR EMAIL, SUCH NOTICE IS GIVEN WHEN THE NOTICE IS
SENT.
  (G) "PERSON" MEANS AN INDIVIDUAL, CORPORATION, BUSINESS TRUST, ESTATE,
TRUST,  PARTNERSHIP,  LIMITED  LIABILITY  COMPANY,  ASSOCIATION,   JOINT
VENTURE, OR ANY OTHER LEGAL ENTITY.
  (H)  "PROGRAM-RELATED ASSET" MEANS AN ASSET HELD BY AN INSTITUTION NOT
FOR INVESTMENT UNDER THE TERMS OF THE GIFT INSTRUMENT, BUT PRIMARILY  TO
ACCOMPLISH A PROGRAMMATIC PURPOSE OF THE INSTITUTION.
  (I)  "RECORD" MEANS INFORMATION THAT IS INSCRIBED ON A TANGIBLE MEDIUM
OR THAT IS STORED IN AN ELECTRONIC OR OTHER MEDIUM AND IS RETRIEVABLE IN
PERCEIVABLE FORM.
  (J) A DONOR IS "AVAILABLE" IF SUCH DONOR (1)  IS  LIVING  OR,  IF  THE
DONOR  IS  NOT  A  NATURAL PERSON, IS IN EXISTENCE AND CONDUCTING ACTIV-
ITIES; AND (2) CAN BE IDENTIFIED AND LOCATED WITH REASONABLE EFFORTS.
S 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 INSTI-
TUTIONAL FUND.

A. 7907--B                          3

  (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  CONDI-
TIONS;  (B)  THE  POSSIBLE  EFFECT  OF  INFLATION  OR DEFLATION; (C) THE
EXPECTED TAX CONSEQUENCES, IF ANY, OF INVESTMENT  DECISIONS  OR  STRATE-
GIES; (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  REASONABLY  DETERMINES  THAT, BECAUSE OF
SPECIAL CIRCUMSTANCES, THE PURPOSES OF THE FUND ARE BETTER SERVED  WITH-
OUT  DIVERSIFICATION.    A  DECISION  NOT TO DIVERSIFY SHALL BE REVIEWED
PERIODICALLY AS THE CIRCUMSTANCES MAY REQUIRE.
  (5) WITHIN A REASONABLE TIME AFTER RECEIVING PROPERTY, AN  INSTITUTION
SHALL  MAKE AND CARRY OUT DECISIONS CONCERNING THE RETENTION OR DISPOSI-
TION 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.
S 553. APPROPRIATION  FOR EXPENDITURE OR ACCUMULATION OF ENDOWMENT FUND;
         RULES OF CONSTRUCTION.
  (A) SUBJECT TO THE INTENT OF A DONOR EXPRESSED IN THE GIFT INSTRUMENT,
AN INSTITUTION MAY APPROPRIATE FOR EXPENDITURE OR ACCUMULATE SO MUCH  OF
AN ENDOWMENT FUND AS THE INSTITUTION DETERMINES IS PRUDENT FOR THE USES,
BENEFITS,  PURPOSES, AND DURATION FOR WHICH THE ENDOWMENT FUND IS ESTAB-

A. 7907--B                          4

LISHED. UNLESS STATED OTHERWISE IN THE GIFT INSTRUMENT, THE ASSETS IN AN
ENDOWMENT  FUND  ARE  DONOR-RESTRICTED  ASSETS  UNTIL  APPROPRIATED  FOR
EXPENDITURE BY THE INSTITUTION. IN MAKING A DETERMINATION TO APPROPRIATE
OR  ACCUMULATE,  THE  INSTITUTION SHALL ACT IN GOOD FAITH, WITH THE CARE
THAT AN ORDINARILY PRUDENT PERSON IN  A  LIKE  POSITION  WOULD  EXERCISE
UNDER  SIMILAR  CIRCUMSTANCES,  AND  SHALL  CONSIDER,  IF  RELEVANT, THE
FOLLOWING FACTORS:
  (1) THE DURATION AND PRESERVATION OF THE ENDOWMENT FUND;
  (2) THE PURPOSES OF THE INSTITUTION AND THE ENDOWMENT FUND;
  (3) GENERAL ECONOMIC CONDITIONS;
  (4) THE POSSIBLE EFFECT OF INFLATION OR DEFLATION;
  (5) THE EXPECTED TOTAL RETURN FROM  INCOME  AND  THE  APPRECIATION  OF
INVESTMENTS;
  (6) OTHER RESOURCES OF THE INSTITUTION; AND
  (7) THE INVESTMENT POLICY OF THE INSTITUTION.
  (B)  TO  LIMIT THE AUTHORITY TO APPROPRIATE FOR EXPENDITURE OR ACCUMU-
LATE UNDER PARAGRAPH (A) OF THIS SECTION, A GIFT INSTRUMENT MUST SPECIF-
ICALLY STATE THE LIMITATION.  TERMS IN A GIFT INSTRUMENT SETTING FORTH A
SPECIFIC SPENDING LEVEL, RATE, OR AMOUNT,  OR  EXPLICITLY  MODIFYING  OR
OVERRIDING  THE  PROVISIONS OF PARAGRAPH (A) OF THIS SECTION, WILL LIMIT
THE AUTHORITY OF THE INSTITUTION TO APPROPRIATE FOR EXPENDITURE OR ACCU-
MULATE UNDER PARAGRAPH (A) OF THIS SECTION.
  (C) TERMS IN A GIFT INSTRUMENT DESIGNATING A GIFT AS AN ENDOWMENT,  OR
A  DIRECTION  OR  AUTHORIZATION  IN  THE  GIFT  INSTRUMENT  TO  USE ONLY
"INCOME," "INTEREST," "DIVIDENDS," OR "RENTS, ISSUES,  OR  PROFITS,"  OR
"TO PRESERVE THE PRINCIPAL INTACT," OR WORDS OF SIMILAR IMPORT:
  (1)  CREATE  AN  ENDOWMENT  FUND  OF  PERMANENT  DURATION UNLESS OTHER
LANGUAGE IN THE GIFT INSTRUMENT LIMITS THE DURATION OR  PURPOSE  OF  THE
FUND; AND
  (2)  DO  NOT OTHERWISE LIMIT THE AUTHORITY TO APPROPRIATE FOR EXPENDI-
TURE OR ACCUMULATE UNDER PARAGRAPH (A) OF THIS SECTION.
  (D) (1) WITH RESPECT TO A GIFT INSTRUMENT DATED BEFORE  THE  EFFECTIVE
DATE  OF THIS ARTICLE, AN INSTITUTION MUST PROVIDE NINETY DAYS NOTICE TO
THE DONOR, IF THE DONOR IS THEN AVAILABLE, BEFORE APPLYING PARAGRAPH (A)
OF THIS SECTION FOR THE FIRST TIME, DURING WHICH  TIME  THE  DONOR  MAY,
WITH  THE  CONSENT OF THE INSTITUTION, CLARIFY OR AMEND THE GIFT INSTRU-
MENT TO PROHIBIT THE APPLICATION OF PARAGRAPH (A) OF THIS SECTION.  SUCH
NOTICE SHALL INCLUDE A FORM FOR USE BY THE DONOR,  WHICH  SHALL  CONTAIN
LANGUAGE SUBSTANTIALLY AS FOLLOWS:
ATTENTION, DONOR:
PLEASE CHECK BOX #1 OR #2 BELOW AND RETURN TO THE ADDRESS SHOWN ABOVE.
( ) #1 THE INSTITUTION MAY SPEND ALL OR PART OF MY GIFT.
       THE  PROVISIONS  OF ARTICLE 5-A OF THE NOT-FOR-PROFIT CORPORATION
       LAW, THE PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT  REGARDING
       THE SPENDING OF ENDOWMENT FUNDS SHALL APPLY TO THIS GIFT.
(  ) #2 THE INSTITUTION MAY NOT SPEND BELOW THE ORIGINAL DOLLAR VALUE OF
       MY GIFT.
       THE PROVISIONS OF ARTICLE 5-A OF THE  NOT-FOR-PROFIT  CORPORATION
       LAW,  THE PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT REGARDING
       THE SPENDING OF ENDOWMENT FUNDS SHALL NOT APPLY TO THIS GIFT.
  IF THE DONOR DOES NOT RESPOND WITHIN NINETY DAYS FROM THE DATE  NOTICE
WAS GIVEN, PARAGRAPH (A) OF THIS SECTION MAY BE APPLIED.
  (2)  FOR  PURPOSES  OF  THIS  PARAGRAPH,  "DONOR" MEANS THE PERSON WHO
GRANTS OR TRANSFERS PROPERTY  TO  AN  INSTITUTION  PURSUANT  TO  A  GIFT
INSTRUMENT,  OR A PERSON DESIGNATED IN THE APPLICABLE GIFT INSTRUMENT TO
ACT IN THE PLACE OF THE  DONOR,  BUT  DOES  NOT  OTHERWISE  INCLUDE  THE

A. 7907--B                          5

PERSON'S  EXECUTORS, HEIRS, SUCCESSORS, ASSIGNS, TRANSFEREES, OR DISTRI-
BUTEES.
  (3) THIS PARAGRAPH SHALL NOT APPLY: (A) IF THE GIFT INSTRUMENT PERMITS
APPROPRIATION FOR EXPENDITURE FROM THE ENDOWMENT FUND WITHOUT REGARD FOR
THE  FUND'S  HISTORIC DOLLAR VALUE; OR (B) TO FUNDS RECEIVED AS A RESULT
OF AN INSTITUTIONAL SOLICITATION WITHOUT A SEPARATE COMMUNICATION BY THE
DONOR EXPRESSING A RESTRICTION ON THE USE OF FUNDS.
  (E) WHEN AN INSTITUTION ACTS PURSUANT TO PARAGRAPH (A) OR (D) OF  THIS
SECTION, IT SHALL KEEP A RECORD OF SUCH ACTION.
S 554. DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.
  (A)  SUBJECT TO ANY SPECIFIC LIMITATION SET FORTH IN A GIFT INSTRUMENT
OR IN LAW OTHER THAN THIS ARTICLE, AN INSTITUTION  MAY  DELEGATE  TO  AN
EXTERNAL AGENT THE MANAGEMENT AND INVESTMENT OF AN INSTITUTIONAL FUND TO
THE  EXTENT  THAT  AN  INSTITUTION  COULD  PRUDENTLY  DELEGATE UNDER THE
CIRCUMSTANCES. AN INSTITUTION SHALL ACT IN GOOD  FAITH,  WITH  THE  CARE
THAT  AN  ORDINARILY  PRUDENT  PERSON  IN A LIKE POSITION WOULD EXERCISE
UNDER SIMILAR CIRCUMSTANCES, IN:
  (1) SELECTING AN AGENT;
  (2) ESTABLISHING THE SCOPE AND TERMS OF THE DELEGATION, INCLUDING  THE
PAYMENT OF COMPENSATION, CONSISTENT WITH THE PURPOSES OF THE INSTITUTION
AND THE INSTITUTIONAL FUND; AND
  (3) PERIODICALLY REVIEWING THE AGENT'S ACTIONS IN ORDER TO MONITOR THE
AGENT'S  PERFORMANCE  AND  COMPLIANCE  WITH  THE  SCOPE AND TERMS OF THE
DELEGATION.
  (B) IN PERFORMING A DELEGATED FUNCTION, AN AGENT OWES A  DUTY  TO  THE
INSTITUTION  TO  EXERCISE  REASONABLE  CARE TO COMPLY WITH THE SCOPE AND
TERMS OF THE DELEGATION.
  (C) AN INSTITUTION THAT COMPLIES WITH PARAGRAPH (A) OF THIS SECTION IS
NOT LIABLE FOR THE DECISIONS OR ACTIONS OF AN AGENT TO WHICH  THE  FUNC-
TION WAS DELEGATED.
  (D)  BY  ACCEPTING  DELEGATION  OF A MANAGEMENT OR INVESTMENT FUNCTION
FROM AN INSTITUTION THAT IS SUBJECT TO THE LAWS OF THIS STATE, AN  AGENT
SUBMITS  TO  THE  JURISDICTION  OF  THE  COURTS  OF  THIS  STATE  IN ALL
PROCEEDINGS ARISING FROM OR RELATED TO THE DELEGATION OR THE PERFORMANCE
OF THE DELEGATED FUNCTION.
  (E) EACH CONTRACT, IF ANY, PURSUANT TO WHICH AUTHORITY IS SO DELEGATED
SHALL PROVIDE THAT IT MAY BE TERMINATED BY THE INSTITUTION AT ANY  TIME,
WITHOUT PENALTY, UPON NOT MORE THAN SIXTY DAYS NOTICE.
  (F) AN INSTITUTION MAY DELEGATE MANAGEMENT AND INVESTMENT FUNCTIONS TO
ITS COMMITTEES, OFFICERS, OR EMPLOYEES AS AUTHORIZED BY THE LAWS OF THIS
STATE  OTHER THAN THIS ARTICLE, AS SET FORTH IN, INTER ALIA, SECTION 514
(DELEGATION OF INVESTMENT MANAGEMENT).
  (G) NOTHING IN THIS ARTICLE SHALL IMPAIR THE OPERATION OF SECTION  717
(DUTY OF DIRECTORS AND OFFICERS).
S 555. RELEASE  OR  MODIFICATION  OF RESTRICTIONS ON MANAGEMENT, INVEST-
         MENT, OR PURPOSE.
  (A) IF THE DONOR CONSENTS IN A RECORD, AN INSTITUTION MAY  RELEASE  OR
MODIFY,  IN  WHOLE OR IN PART, A RESTRICTION CONTAINED IN A GIFT INSTRU-
MENT ON THE MANAGEMENT, INVESTMENT, OR PURPOSE OF AN INSTITUTIONAL FUND.
A RELEASE OR MODIFICATION MAY NOT ALLOW A FUND TO BE USED FOR A  PURPOSE
OTHER THAN A PROGRAMMATIC PURPOSE OF THE INSTITUTION.
  (B)  A  COURT,  UPON  APPLICATION  OF  AN  INSTITUTION,  MAY  MODIFY A
RESTRICTION CONTAINED IN A GIFT INSTRUMENT REGARDING THE  MANAGEMENT  OR
INVESTMENT  OF  AN  INSTITUTIONAL  FUND  IF  THE  RESTRICTION HAS BECOME
IMPRACTICABLE OR WASTEFUL, IF IT IMPAIRS THE MANAGEMENT OR INVESTMENT OF
THE FUND, OR IF, BECAUSE OF CIRCUMSTANCES NOT ANTICIPATED BY THE  DONOR,

A. 7907--B                          6

A  MODIFICATION  OF A RESTRICTION WILL FURTHER THE PURPOSES OF THE FUND.
THE INSTITUTION SHALL NOTIFY THE DONOR, IF AVAILABLE, AND  THE  ATTORNEY
GENERAL  OF  THE  APPLICATION, AND THE ATTORNEY GENERAL MUST BE GIVEN AN
OPPORTUNITY  TO  BE  HEARD.  TO THE EXTENT PRACTICABLE, ANY MODIFICATION
MUST BE MADE IN ACCORDANCE WITH THE DONOR'S PROBABLE INTENTION.
  (C) IF A PARTICULAR PURPOSE OR  A  RESTRICTION  CONTAINED  IN  A  GIFT
INSTRUMENT ON THE USE OF AN INSTITUTIONAL FUND BECOMES UNLAWFUL, IMPRAC-
TICABLE, IMPOSSIBLE TO ACHIEVE, OR WASTEFUL, THE COURT, UPON APPLICATION
OF AN INSTITUTION, MAY MODIFY THE PURPOSE OF THE FUND OR THE RESTRICTION
ON  THE  USE  OF  THE  FUND  IN  A  MANNER  CONSISTENT WITH THE PURPOSES
EXPRESSED IN THE GIFT  INSTRUMENT.  THE  INSTITUTION  SHALL  NOTIFY  THE
DONOR,  IF  AVAILABLE,  AND THE ATTORNEY GENERAL OF THE APPLICATION, AND
THE ATTORNEY GENERAL MUST BE GIVEN AN OPPORTUNITY TO BE HEARD.
  (D)(1) IF AN INSTITUTION DETERMINES THAT A RESTRICTION CONTAINED IN  A
GIFT INSTRUMENT ON THE MANAGEMENT, INVESTMENT, OR PURPOSE OF AN INSTITU-
TIONAL FUND IS UNLAWFUL, IMPRACTICABLE, IMPOSSIBLE TO ACHIEVE, OR WASTE-
FUL,  THE  INSTITUTION,  NINETY  DAYS AFTER NOTIFICATION TO THE ATTORNEY
GENERAL, MAY RELEASE OR MODIFY THE RESTRICTION, IN WHOLE OR PART, IF:
  (A) THE INSTITUTIONAL FUND SUBJECT TO  THE  RESTRICTION  HAS  A  TOTAL
VALUE OF LESS THAN TWO HUNDRED FIFTY THOUSAND DOLLARS;
  (B)  MORE  THAN  TWENTY  YEARS  HAVE ELAPSED SINCE THE FUND WAS ESTAB-
LISHED; AND
  (C) THE INSTITUTION USES THE PROPERTY IN A MANNER CONSISTENT WITH  THE
PURPOSES EXPRESSED IN THE GIFT INSTRUMENT.
  (2)  NOTICE  TO THE ATTORNEY GENERAL SHALL CONTAIN: (A) AN EXPLANATION
OF (I) THE INSTITUTION'S DETERMINATION THAT THE  RESTRICTION  MEETS  THE
REQUIREMENTS  SET  FORTH  IN SUBPARAGRAPH ONE OF THIS PARAGRAPH AND (II)
THE PROPOSED RELEASE OR MODIFICATION; (B) A COPY  OF  A  RECORD  OF  THE
INSTITUTION  APPROVING  THE RELEASE OR MODIFICATION; AND (C) A STATEMENT
OF THE PROPOSED USE OF THE INSTITUTIONAL  FUND  AFTER  SUCH  RELEASE  OR
MODIFICATION.
  (3)  IF  THE  ATTORNEY  GENERAL DOES NOT NOTIFY THE INSTITUTION WITHIN
NINETY DAYS, THE INSTITUTION MAY PROCEED WITH THE RELEASE  OR  MODIFICA-
TION.
  (4)  NOTICE  SHALL  ALSO BE GIVEN TO THE DONOR, AS DEFINED IN SUBPARA-
GRAPH TWO OF PARAGRAPH (D) OF SECTION 553 (APPROPRIATION FOR EXPENDITURE
OR ACCUMULATION OF ENDOWMENT FUND; RULES OF CONSTRUCTION), IF AVAILABLE,
PROVIDED, HOWEVER, THAT SUCH NOTICE SHALL  NOT  BE  REQUIRED  FOR  FUNDS
DESCRIBED  IN  CLAUSE  (B)  OF  SUBPARAGRAPH  THREE  OF PARAGRAPH (D) OF
SECTION 553 (APPROPRIATION FOR EXPENDITURE OR ACCUMULATION OF  ENDOWMENT
FUND; RULES OF CONSTRUCTION).
  (E)  FOR  PURPOSES  OF  THIS  SECTION, AN INSTITUTION MAY APPLY TO THE
FOLLOWING COURTS TO RELEASE OR MODIFY A RESTRICTION CONTAINED IN A  GIFT
INSTRUMENT:
  (1) TO THE SUPREME COURT OF THE JUDICIAL DISTRICT WHEREIN THE INSTITU-
TION  HAS ITS OFFICE OR PRINCIPAL PLACE OF CARRYING OUT THE PURPOSES FOR
WHICH IT WAS FORMED; OR
  (2) WHERE THE APPLICABLE GIFT INSTRUMENT IS A WILL, TO THE SURROGATE'S
COURT IN WHICH SUCH WILL IS PROBATED.
  (F) THIS SECTION SHALL NOT LIMIT THE APPLICATION OF THE DOCTRINE OF CY
PRES.
S 556. REVIEWING COMPLIANCE.
  COMPLIANCE WITH THIS ARTICLE SHALL BE DETERMINED IN LIGHT OF THE FACTS
AND CIRCUMSTANCES EXISTING AT THE TIME A DECISION IS MADE OR  ACTION  IS
TAKEN, AND NOT RETROSPECTIVELY.
S 557. APPLICATION TO EXISTING INSTITUTIONAL FUNDS.

A. 7907--B                          7

  THIS  ARTICLE SHALL APPLY TO INSTITUTIONAL FUNDS EXISTING ON OR ESTAB-
LISHED AFTER THE EFFECTIVE DATE OF THIS ARTICLE. AS APPLIED TO  INSTITU-
TIONAL  FUNDS EXISTING ON THE EFFECTIVE DATE OF THIS ARTICLE, THIS ARTI-
CLE SHALL GOVERN ONLY DECISIONS MADE OR ACTIONS TAKEN ON OR  AFTER  THAT
DATE.
S 558. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE
         ACT.
  THIS  ARTICLE  MODIFIES,  LIMITS, AND SUPERSEDES THE ELECTRONIC SIGNA-
TURES IN GLOBAL AND NATIONAL COMMERCE ACT, 15  U.S.C.  SECTION  7001  ET
SEQ.,  BUT DOES NOT MODIFY, LIMIT, OR SUPERSEDE SECTION 101 OF THAT ACT,
15 U.S.C. SECTION 7001(A), OR AUTHORIZE ELECTRONIC DELIVERY  OF  ANY  OF
THE  NOTICES  DESCRIBED  IN  SECTION  103 OF THAT ACT, 15 U.S.C. SECTION
7003(B).
  S 2. Subparagraphs 13, 14 and 17 of  paragraph  (a)  of  section  102,
section  512,  paragraphs (c) and (d) of section 513, and section 522 of
the not-for-profit corporation law are REPEALED.
  S 3. The closing subparagraph of paragraph (a) and  paragraph  (b)  of
section  406  of the not-for-profit corporation law, as added by chapter
331 of the laws of 1971, are amended to read as follows:
Except as provided in paragraph (b),  this  paragraph  applies  notwith-
standing  any other provision of the certificate of incorporation or any
direction in [an] A GIFT instrument [referred to in section 513  (Admin-
istration of assets received for specific purposes)].
  (b) Paragraph (a) shall not apply to the extent that it conflicts with
any  mandatory  direction  in  [an]  A  GIFT instrument [by which assets
referred to in section 513 were transferred to the corporation] EXECUTED
prior to the effective date of  this  section  unless  such  conflicting
direction  is  removed  as  impracticable  under  article  eight  of the
estates, powers and trusts law or in any other manner provided  by  law.
The absence of a specific provision in the [section 513 instrument] GIFT
INSTRUMENT  for  the  current  use  of the principal of the fund, or the
presence in such an instrument of a provision, as to the principal of  a
fund, limited to the principal's being held, invested and reinvested, is
not such a conflicting mandatory direction.
  S  4.  Section 406 of the not-for-profit corporation law is amended by
adding a new paragraph (e) to read as follows:
  (E) FOR PURPOSES OF THIS SECTION, THE TERM GIFT INSTRUMENT SHALL  HAVE
THE MEANING SET FORTH IN SECTION 551 (DEFINITIONS).
  S  5.  Paragraph  (b) of section 513 of the not-for-profit corporation
law, as amended by chapter 690 of the laws of 1978, is amended  to  read
as follows:
  (b)  Except  as  may be otherwise permitted under article eight of the
estates, powers and trusts law or section [522 (Release of  restrictions
on  use  or investment)] 555 (RELEASE OR MODIFICATION OF RESTRICTIONS ON
MANAGEMENT, INVESTMENT, OR PURPOSE), the governing board shall apply all
assets thus received to the purposes specified in the gift instrument AS
DEFINED IN SECTION 551 (DEFINITIONS) and to the payment of  the  reason-
able and proper expenses of administration of such assets. The governing
board  shall  cause accurate accounts to be kept of such assets separate
and apart from the accounts of other assets of the corporation.   Unless
the terms of the particular gift instrument provide otherwise, the trea-
surer  shall  make an annual report to the members (if there be members)
or to the governing board (if there be no members) concerning the assets
held under this section and the use made  of  such  assets  and  of  the
income thereof.

A. 7907--B                          8

  S  6.  Paragraph  (a) of section 514 of the not-for-profit corporation
law, as added by chapter 690 of the laws of 1978, is amended to read  as
follows:
  (a)  Except as otherwise provided by the applicable gift instrument AS
DEFINED IN SECTION 551 (DEFINITIONS),  the  governing  board  may  [(1)]
delegate  to its committees, officers or employees of the corporation or
the fund[, or agents, including investment counsel,]  the  authority  to
act  in  place  of the governing board in investment and reinvestment of
institutional funds[, (2) contract with independent investment advisors,
investment counsel or managers, banks, or trust companies,  so  to  act,
and (3) authorize the payment of compensation for investment advisory or
management  services, advisors, investment counsel or managers, banks or
trust companies, so to act] AS DEFINED  IN  SECTION  551  (DEFINITIONS).
Each contract, IF ANY, pursuant to which authority is so delegated shall
provide  that  it  may be terminated by the governing board at any time,
without penalty, upon not more than  sixty  days'  notice.  SECTION  554
(DELEGATION   OF  MANAGEMENT  AND  INVESTMENT  FUNCTIONS)  SHALL  GOVERN
EXTERNAL DELEGATION.
  S 7. Paragraph (a) of section 717 of  the  not-for-profit  corporation
law,  as  amended by chapter 690 of the laws of 1978, is amended to read
as follows:
  (a) Directors and officers shall discharge the duties of their respec-
tive positions in good faith and with [that degree  of  diligence,  care
and  skill  which  ordinarily  prudent  men would exercise under similar
circumstances in like positions] THE CARE AN ORDINARILY  PRUDENT  PERSON
IN  A LIKE POSITION WOULD EXERCISE UNDER SIMILAR CIRCUMSTANCES.  [In the
administration of the powers to make and retain investments pursuant  to
section 512 (Investment authority), to appropriate appreciation pursuant
to   section   513  (Administration  of  assets  received  for  specific
purposes), and to delegate] THE FACTORS SET FORTH IN SUBPARAGRAPH ONE OF
PARAGRAPH (E) OF SECTION  552  (STANDARD  OF  CONDUCT  IN  MANAGING  AND
INVESTING  AN  INSTITUTIONAL FUND), IF RELEVANT, MUST BE CONSIDERED BY A
GOVERNING BOARD DELEGATING investment management of institutional  funds
pursuant  to  section  514  (Delegation  of  investment  management)[, a
governing board shall consider among other relevant  considerations  the
long  and  short  term  needs  of  the  corporation  in carrying out its
purposes, its present and anticipated financial  requirements,  expected
total return on its investments, price level trends, and general econom-
ic  conditions]  FOR  PURPOSES OF THIS PARAGRAPH, THE TERM INSTITUTIONAL
FUND IS DEFINED IN SECTION 551 (DEFINITIONS).
  S 8. Paragraphs (c) and (e) of subdivision 1 of  section  2-b  of  the
religious  corporations  law, paragraph (c) as amended by chapter 623 of
the laws of 1992, paragraph (e) as added by chapter 690 of the  laws  of
1978, are amended to read as follows:
  (c)  The  following  provisions  of the not-for-profit corporation law
shall not apply to religious corporations: subparagraphs (7) and (8)  of
paragraph  (a)  of section one hundred twelve, section one hundred thir-
teen, section one hundred fourteen, section  two  hundred  one,  section
three  hundred  three, section three hundred four, section three hundred
five, section three  hundred  six,  article  four  except  section  four
hundred one, section five hundred fourteen, that portion of section five
hundred  [twenty-two (b)] FIFTY-FIVE (B) AND SECTION FIVE HUNDRED FIFTY-
FIVE (C) which reads "[The attorney general shall  be  notified  of  the
application  and shall be given an opportunity to be heard] THE INSTITU-
TION SHALL NOTIFY THE ATTORNEY  GENERAL  OF  THE  APPLICATION,  AND  THE
ATTORNEY  GENERAL MUST BE GIVEN AN OPPORTUNITY TO BE HEARD", section six

A. 7907--B                          9

hundred five, section six  hundred  seven,  section  six  hundred  nine,
section  eight  hundred  four,  article nine except section nine hundred
ten, article ten except as provided in section eleven  hundred  fifteen,
section  eleven hundred two, and article fifteen except paragraph (c) of
section fifteen hundred seven.
  (e) No action shall be taken by the trustees of an incorporated  Roman
Catholic  church, or of a Ruthenian Greek Catholic church, under section
five hundred [twenty-two] FIFTY-FIVE of the  not-for-profit  corporation
law [(Release of restrictions on use or investment)] (RELEASE OR MODIFI-
CATION  OF  RESTRICTIONS  ON MANAGEMENT, INVESTMENT, OR PURPOSE) without
the consent of the archbishop or bishop of the  diocese  to  which  such
church  belongs or in case of their absence or inability to act, without
the consent of the vicar general or administrator of such diocese.
  S 9. Paragraph (e) of section 8-1.1 of the estates, powers and  trusts
law,  as  amended by chapter 686 of the laws of 1967, is amended to read
as follows:
  (e) Any accumulation of income from property subject to a  disposition
in trust for a religious, charitable, educational or benevolent purpose,
or  otherwise  acquired  by such trust, shall in all respects, including
its reasonableness, amount and duration, be within the  jurisdiction  of
the supreme court or the surrogate's court, as the case may be. In exer-
cising  such  jurisdiction,  (1)  any accumulation of income which might
otherwise be applied for the purposes of the trust may be prohibited  or
limited,  despite  a valid direction therefor in the trust instrument or
authority therefor under 8-1.7 and  (2)  such  an  accumulation  may  be
authorized  by  order  of  the  court despite the absence of a direction
therefor in the trust instrument.  THIS PARAGRAPH SHALL NOT RESTRICT  IN
ANY  MANNER  THE  ABILITY  TO RELEASE OR MODIFY RESTRICTIONS RELATING TO
INSTITUTIONAL FUNDS UNDER SECTION 555 OF THE NOT-FOR-PROFIT  CORPORATION
LAW.
  S 10. Paragraph (j) of section 8-1.1 of the estates, powers and trusts
law is amended to read as follows:
  (j)  Whenever  a  voluntary  association or committee has received, by
public subscription, a fund for a charitable or benevolent purpose  from
more  than  one  thousand contributors, a portion of which remains unex-
pended after the expiration of five years from the time of its  receipt,
and  it  appears  that  a  literal  compliance  with  the  terms  of the
subscription is impracticable, the  supreme  court  may  make  an  order
directing that such unexpended balance be transferred for administration
and  application  to such domestic corporation as in the judgment of the
court will most effectively accomplish the  general  purpose  for  which
such fund was collected, free from any restriction, limitation or direc-
tion  upon  which the subscription was made; and on the transfer of such
fund to the corporation designated in the order, such voluntary  associ-
ation,  its  officers  and  trustees, or such committee and its officers
shall be fully exonerated and discharged from all liability  to  account
for  such  fund.    THIS  PARAGRAPH SHALL NOT RESTRICT IN ANY MANNER THE
ABILITY TO RELEASE OR  MODIFY  RESTRICTIONS  RELATING  TO  INSTITUTIONAL
FUNDS UNDER SECTION 555 OF THE NOT-FOR-PROFIT CORPORATION LAW.
  S  11.  Section 8-1.7 of the estates, powers and trusts law is amended
by adding a new paragraph (b) to read as follows:
  (B) THIS SECTION SHALL NOT RESTRICT IN ANY  MANNER  THE  APPROPRIATION
FOR  EXPENDITURE  OR  ACCUMULATION  OF  ENDOWMENT  FUNDS AS SET FORTH IN
SECTION 553 OF THE NOT-FOR-PROFIT CORPORATION LAW.

A. 7907--B                         10

  S 12. Subparagraph 1  of  paragraph  (e)  of  section  11-2.3  of  the
estates,  powers  and trusts law, as added by chapter 609 of the laws of
1994, is amended to read as follows:
  (1)  the  term  "trustee" includes a personal representative, trustee,
guardian, donee of a  power  during  minority,  guardian  under  article
eighty-one  of  the  mental hygiene law, committee of the property of an
incompetent person, and conservator of the property  of  a  conservatee,
BUT  DOES NOT INCLUDE AN INSTITUTIONAL FUND AS DEFINED IN SECTION 551 OF
THE NOT-FOR-PROFIT CORPORATION LAW;
  S 13. Subdivision 1 of section 2115 of the surrogate's court procedure
act, as added by chapter 609 of the laws of 1994, is amended to read  as
follows:
  1.  At  any time during the administration of a trust and irrespective
of the pendency of a particular proceeding, the court with  jurisdiction
of  the trust may review the reasonableness of the costs of a delegation
by the trustee under section 11-2.3 of the estates,  powers  and  trusts
law AND UNDER SECTION 554 OF THE NOT-FOR-PROFIT CORPORATION LAW.
  S  14. Subdivision 2 of section 174-b of the executive law, as amended
by chapter 43 of the laws of 2002, is amended to read as follows:
  2. Any solicitation used by or on behalf of any  charitable  organiza-
tion  shall  provide  a clear description of the programs and activities
for which it has requested and has expended or will expend contributions
or shall include therein a statement that, upon request,  a  person  may
obtain from the organization such a description.  IF THE SOLICITATION IS
BY AN INSTITUTION SUBJECT TO ARTICLE FIVE-A OF THE NOT-FOR-PROFIT CORPO-
RATION  LAW, AND IS FOR AN ENDOWMENT FUND, THE SOLICITATION MUST INCLUDE
A STATEMENT THAT, UNLESS OTHERWISE RESTRICTED  BY  THE  GIFT  INSTRUMENT
PURSUANT  TO  PARAGRAPH  (B)  OF SECTION FIVE HUNDRED FIFTY-THREE OF THE
NOT-FOR-PROFIT CORPORATION LAW, THE INSTITUTION MAY EXPEND SO MUCH OF AN
ENDOWMENT FUND AS IT DEEMS PRUDENT AFTER  CONSIDERING  THE  FACTORS  SET
FORTH  IN  PARAGRAPH  (A)  OF  SECTION  FIVE  HUNDRED FIFTY-THREE OF THE
NOT-FOR-PROFIT CORPORATION LAW.
  S 15. If any clause, sentence, paragraph, subdivision, section or part
of this act shall be adjudged by any court of competent jurisdiction  to
be  invalid,  such judgement shall not affect, impair, or invalidate the
remainder thereof, but shall be confined in its operation to the clause,
sentence, paragraph,  subdivision,  section  or  part  thereof  directly
involved  in  the  controversy  in  which such judgement shall have been
rendered. It is hereby declared to be the intent of the legislature that
this act would have been enacted even if such invalid provisions had not
been included herein.
  S 16. This act shall take  effect  on  the  first  of  September  next
succeeding the date on which it shall have become a law.

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7907--C

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                             April 28, 2009
                               ___________

Introduced  by  M.  of  A.  BING, BRODSKY, ROSENTHAL, CASTRO, DenDEKKER,
  FIELDS, SCHIMMINGER, ESPAILLAT --  Multi-Sponsored  by  --  M.  of  A.
  DelMONTE,  MAYERSOHN,  MENG,  TITONE  -- read once and referred to the
  Committee on Corporations, Authorities and  Commissions  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to  said  committee -- reported and referred to the Committee on Codes
  -- committee discharged, bill amended, ordered  reprinted  as  amended
  and  recommitted  to said committee -- recommitted to the Committee on
  Corporations, Authorities and Commissions in accordance with  Assembly
  Rule  3,  sec.  2  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee

AN ACT to amend the not-for-profit corporation law, the religious corpo-
  rations law, the estates, powers and trusts law, the surrogate's court
  procedure act and the executive law, in relation to adopting a prudent
  management of institutional funds  standard;  and  to  repeal  certain
  provisions of the not-for-profit corporation law relating thereto

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The not-for-profit corporation law is amended by  adding  a
new article 5-A to read as follows:
                               ARTICLE 5-A
              PRUDENT MANAGEMENT OF INSTITUTIONAL FUNDS ACT
SECTION 550. SHORT TITLE.
        551. DEFINITIONS.
        552. STANDARD  OF  CONDUCT IN MANAGING AND INVESTING AN INSTITU-
               TIONAL FUND.
        553. APPROPRIATION FOR EXPENDITURE OR ACCUMULATION OF  ENDOWMENT
               FUND; RULES OF CONSTRUCTION.
        554. DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.
        555. RELEASE  OR  MODIFICATION  OF  RESTRICTIONS  ON MANAGEMENT,
               INVESTMENT, OR PURPOSE.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11125-13-0
              

A. 7907--C                          2

        556. REVIEWING COMPLIANCE.
        557. APPLICATION TO EXISTING INSTITUTIONAL FUNDS.
        558. RELATION  TO  ELECTRONIC  SIGNATURES IN GLOBAL AND NATIONAL
               COMMERCE ACT.
S 550. SHORT TITLE.
  THIS ARTICLE MAY BE KNOWN AND MAY BE CITED AS THE  "NEW  YORK  PRUDENT
MANAGEMENT OF INSTITUTIONAL FUNDS ACT".
S 551. DEFINITIONS.
  AS USED IN THIS ARTICLE:
  (A)  "CHARITABLE PURPOSE" MEANS THE RELIEF OF POVERTY, THE ADVANCEMENT
OF EDUCATION OR RELIGION, THE PROMOTION OF HEALTH, THE  PROMOTION  OF  A
GOVERNMENTAL  PURPOSE,  OR ANY OTHER PURPOSE THE ACHIEVEMENT OF WHICH IS
BENEFICIAL TO THE COMMUNITY.
  (A-1) "DONOR" MEANS THE PERSON WHO GRANTS OR TRANSFERS PROPERTY TO  AN
INSTITUTION PURSUANT TO A GIFT INSTRUMENT, OR A PERSON DESIGNATED IN THE
APPLICABLE  GIFT  INSTRUMENT  TO ACT IN THE PLACE OF THE DONOR, BUT DOES
NOT  OTHERWISE  INCLUDE  THE  PERSON'S  EXECUTORS,  HEIRS,   SUCCESSORS,
ASSIGNS, TRANSFEREES, OR DISTRIBUTEES.
  (B) "ENDOWMENT FUND" MEANS AN INSTITUTIONAL FUND OR PART THEREOF THAT,
UNDER  THE  TERMS  OF A GIFT INSTRUMENT, IS NOT WHOLLY EXPENDABLE BY THE
INSTITUTION ON A CURRENT BASIS. THE TERM DOES NOT INCLUDE ASSETS THAT AN
INSTITUTION MAY DESIGNATE AS AN ENDOWMENT FUND FOR ITS OWN USE, CONSIST-
ENT WITH THE TERMS OF THE APPLICABLE GIFT INSTRUMENT.
  (C) "GIFT INSTRUMENT" MEANS A RECORD OR RECORDS, INCLUDING AN INSTITU-
TIONAL SOLICITATION, UNDER WHICH PROPERTY IS GRANTED TO, TRANSFERRED TO,
OR HELD BY AN INSTITUTION AS AN INSTITUTIONAL FUND.
  (D) "INSTITUTION" MEANS: (1)  A  PERSON,  OTHER  THAN  AN  INDIVIDUAL,
ORGANIZED  AND OPERATED EXCLUSIVELY FOR CHARITABLE PURPOSES; (2) A TRUST
THAT HAD BOTH CHARITABLE AND NONCHARITABLE INTERESTS, AFTER ALL NONCHAR-
ITABLE INTERESTS HAVE TERMINATED; OR (3) ANY  CORPORATION  DESCRIBED  IN
SUBPARAGRAPH FIVE OF PARAGRAPH (A) OF SECTION 102 (DEFINITIONS).
  (E)  "INSTITUTIONAL  FUND"  MEANS A FUND HELD BY AN INSTITUTION.  THIS
TERM SHALL NOT INCLUDE: (1) PROGRAM-RELATED ASSETS; (2) A FUND HELD  FOR
AN INSTITUTION BY A TRUSTEE THAT IS NOT AN INSTITUTION; OR (3) A FUND IN
WHICH  A  BENEFICIARY  THAT IS NOT AN INSTITUTION HAS AN INTEREST, OTHER
THAN AN INTEREST THAT COULD ARISE  UPON  VIOLATION  OR  FAILURE  OF  THE
PURPOSES OF THE FUND.
  (F)  "NOTICE" MEANS INFORMATION GIVEN BY AN INSTITUTION AS REQUIRED BY
THIS ARTICLE. AN INSTITUTION WILL BE CONSIDERED TO HAVE GIVEN NOTICE  IF
NOTICE  IS  GIVEN  PERSONALLY IN WRITING OR SENT TO THE RECIPIENT'S LAST
KNOWN ADDRESS ON RECORD WITH THE INSTITUTION, OR, IF NO  ADDRESS  IS  ON
RECORD WITH THE INSTITUTION, IF THE INSTITUTION MAKES REASONABLE EFFORTS
TO  ATTEMPT  TO FIND AND NOTIFY THE RECIPIENT.  IF THE NOTICE IS MAILED,
SUCH NOTICE IS GIVEN WHEN DEPOSITED IN  THE  UNITED  STATES  MAIL,  WITH
POSTAGE THEREON PREPAID. IF THE NOTICE IS DELIVERED BY ELECTRONIC MEANS,
SUCH  AS VIA FACSIMILE OR EMAIL, SUCH NOTICE IS GIVEN WHEN THE NOTICE IS
SENT.
  (G) "PERSON" MEANS AN INDIVIDUAL, CORPORATION, BUSINESS TRUST, ESTATE,
TRUST,  PARTNERSHIP,  LIMITED  LIABILITY  COMPANY,  ASSOCIATION,   JOINT
VENTURE, OR ANY OTHER LEGAL ENTITY.
  (H)  "PROGRAM-RELATED ASSET" MEANS AN ASSET HELD BY AN INSTITUTION NOT
FOR INVESTMENT UNDER THE TERMS OF THE GIFT INSTRUMENT, BUT PRIMARILY  TO
ACCOMPLISH A PROGRAMMATIC PURPOSE OF THE INSTITUTION.
  (I)  "RECORD" MEANS INFORMATION THAT IS INSCRIBED ON A TANGIBLE MEDIUM
OR THAT IS STORED IN AN ELECTRONIC OR OTHER MEDIUM AND IS RETRIEVABLE IN
PERCEIVABLE FORM.

A. 7907--C                          3

  (J) A DONOR IS "AVAILABLE" IF SUCH DONOR (1)  IS  LIVING  OR,  IF  THE
DONOR  IS  NOT  A  NATURAL PERSON, IS IN EXISTENCE AND CONDUCTING ACTIV-
ITIES; AND (2) CAN BE IDENTIFIED AND LOCATED WITH REASONABLE EFFORTS.
S 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  INSTI-
TUTIONAL 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 CONDI-
TIONS; (B) THE POSSIBLE  EFFECT  OF  INFLATION  OR  DEFLATION;  (C)  THE
EXPECTED  TAX  CONSEQUENCES,  IF ANY, OF INVESTMENT DECISIONS OR STRATE-
GIES; (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  REASONABLY  DETERMINES  THAT,  BECAUSE  OF
SPECIAL  CIRCUMSTANCES, THE PURPOSES OF THE FUND ARE BETTER SERVED WITH-
OUT DIVERSIFICATION.   A DECISION NOT TO  DIVERSIFY  SHALL  BE  REVIEWED
PERIODICALLY AS THE CIRCUMSTANCES MAY REQUIRE.
  (5)  WITHIN A REASONABLE TIME AFTER RECEIVING PROPERTY, AN INSTITUTION
SHALL MAKE AND CARRY OUT DECISIONS CONCERNING THE RETENTION OR  DISPOSI-
TION  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.

A. 7907--C                          4

  (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.
S 553. APPROPRIATION  FOR EXPENDITURE OR ACCUMULATION OF ENDOWMENT FUND;
         RULES OF CONSTRUCTION.
  (A) SUBJECT TO THE INTENT OF A DONOR EXPRESSED IN THE GIFT INSTRUMENT,
AN INSTITUTION MAY APPROPRIATE FOR EXPENDITURE OR ACCUMULATE SO MUCH  OF
AN ENDOWMENT FUND AS THE INSTITUTION DETERMINES IS PRUDENT FOR THE USES,
BENEFITS,  PURPOSES, AND DURATION FOR WHICH THE ENDOWMENT FUND IS ESTAB-
LISHED. UNLESS STATED OTHERWISE IN THE GIFT INSTRUMENT, THE ASSETS IN AN
ENDOWMENT  FUND  ARE  DONOR-RESTRICTED  ASSETS  UNTIL  APPROPRIATED  FOR
EXPENDITURE BY THE INSTITUTION. IN MAKING A DETERMINATION TO APPROPRIATE
OR  ACCUMULATE,  THE  INSTITUTION SHALL ACT IN GOOD FAITH, WITH THE CARE
THAT AN ORDINARILY PRUDENT PERSON IN  A  LIKE  POSITION  WOULD  EXERCISE
UNDER  SIMILAR  CIRCUMSTANCES,  AND  SHALL  CONSIDER,  IF  RELEVANT, THE
FOLLOWING FACTORS:
  (1) THE DURATION AND PRESERVATION OF THE ENDOWMENT FUND;
  (2) THE PURPOSES OF THE INSTITUTION AND THE ENDOWMENT FUND;
  (3) GENERAL ECONOMIC CONDITIONS;
  (4) THE POSSIBLE EFFECT OF INFLATION OR DEFLATION;
  (5) THE EXPECTED TOTAL RETURN FROM  INCOME  AND  THE  APPRECIATION  OF
INVESTMENTS;
  (6) OTHER RESOURCES OF THE INSTITUTION; AND
  (7) THE INVESTMENT POLICY OF THE INSTITUTION.
  (B)  TO  LIMIT THE AUTHORITY TO APPROPRIATE FOR EXPENDITURE OR ACCUMU-
LATE UNDER PARAGRAPH (A) OF THIS SECTION, A GIFT INSTRUMENT MUST SPECIF-
ICALLY STATE THE LIMITATION.  TERMS IN A GIFT INSTRUMENT SETTING FORTH A
SPECIFIC SPENDING LEVEL, RATE, OR AMOUNT,  OR  EXPLICITLY  MODIFYING  OR
OVERRIDING  THE  PROVISIONS OF PARAGRAPH (A) OF THIS SECTION, WILL LIMIT
THE AUTHORITY OF THE INSTITUTION TO APPROPRIATE FOR EXPENDITURE OR ACCU-
MULATE UNDER PARAGRAPH (A) OF THIS SECTION.
  (C) TERMS IN A GIFT INSTRUMENT DESIGNATING A GIFT AS AN ENDOWMENT,  OR
A  DIRECTION  OR  AUTHORIZATION  IN  THE  GIFT  INSTRUMENT  TO  USE ONLY
"INCOME," "INTEREST," "DIVIDENDS," OR "RENTS, ISSUES,  OR  PROFITS,"  OR
"TO PRESERVE THE PRINCIPAL INTACT," OR WORDS OF SIMILAR IMPORT:
  (1)  CREATE  AN  ENDOWMENT  FUND  OF  PERMANENT  DURATION UNLESS OTHER
LANGUAGE IN THE GIFT INSTRUMENT LIMITS THE DURATION OR  PURPOSE  OF  THE
FUND; AND
  (2)  DO  NOT OTHERWISE LIMIT THE AUTHORITY TO APPROPRIATE FOR EXPENDI-
TURE OR ACCUMULATE UNDER PARAGRAPH (A) OF THIS SECTION.
  (D)(1) WITH RESPECT TO A GIFT INSTRUMENT EXECUTED BY THE DONOR  BEFORE
THE  EFFECTIVE  DATE OF THIS ARTICLE, AN INSTITUTION MUST PROVIDE NINETY
DAYS NOTICE TO THE DONOR, IF THE DONOR IS THEN AVAILABLE, BEFORE  APPLY-
ING  PARAGRAPH (A) OF THIS SECTION FOR THE FIRST TIME, DURING WHICH TIME
THE DONOR MAY, WITH THE CONSENT OF THE INSTITUTION, CLARIFY OR AMEND THE
GIFT INSTRUMENT TO PROHIBIT THE APPLICATION OF  PARAGRAPH  (A)  OF  THIS
SECTION.  SUCH  NOTICE  SHALL INCLUDE A FORM FOR USE BY THE DONOR, WHICH
SHALL CONTAIN LANGUAGE SUBSTANTIALLY AS FOLLOWS:
ATTENTION, DONOR:
PLEASE CHECK BOX #1 OR #2 BELOW AND RETURN TO THE ADDRESS SHOWN ABOVE.
( ) #1 THE INSTITUTION MAY SPEND AS MUCH OF MY GIFT AS  MAY  BE  PRUDENT
       UNDER  CRITERIA  ESTABLISHED  BY THE PROVISIONS OF ARTICLE 5-A OF
       THE NOT-FOR-PROFIT CORPORATION LAW,  THE  PRUDENT  MANAGEMENT  OF
       INSTITUTIONAL FUNDS ACT.

A. 7907--C                          5

( ) #2 NOTWITHSTANDING THE PROVISIONS OF ARTICLE 5-A OF THE NOT-FOR-PRO-
       FIT  CORPORATION  LAW,  THE  PRUDENT  MANAGEMENT OF INSTITUTIONAL
       FUNDS ACT, THE INSTITUTION  MAY  NOT  SPEND  BELOW  THE  ORIGINAL
       DOLLAR  VALUE  OF  MY  GIFT.  HOWEVER  THE PRUDENCE STANDARDS FOR
       SPENDING  CONTAINED  IN  ARTICLE 5-A OF THE NOT-FOR-PROFIT CORPO-
       RATION LAW SHALL APPLY.
  IF THE DONOR DOES NOT RESPOND WITHIN NINETY DAYS FROM THE DATE  NOTICE
WAS  GIVEN,  PARAGRAPHS  (A),  (B),  AND  (C)  OF  THIS SECTION SHALL BE
APPLIED.  THE ACT OF SENDING THE FORM AS REQUIRED BY THIS SECTION  SHALL
NOT BE DEEMED CONSENT BY THE INSTITUTION.
  (2) THIS PARAGRAPH SHALL NOT APPLY: (A) IF THE GIFT INSTRUMENT PERMITS
APPROPRIATION FOR EXPENDITURE FROM THE ENDOWMENT FUND WITHOUT REGARD FOR
THE  FUND'S  HISTORIC DOLLAR VALUE; OR (B) TO FUNDS RECEIVED AS A RESULT
OF AN INSTITUTIONAL SOLICITATION WITHOUT A SEPARATE COMMUNICATION BY THE
DONOR EXPRESSING A RESTRICTION ON THE USE OF FUNDS.
  (E) WHEN AN INSTITUTION ACTS PURSUANT TO PARAGRAPH (A) OR (E) OF  THIS
SECTION, IT SHALL KEEP A RECORD OF SUCH ACTION.
S 554. DELEGATION OF MANAGEMENT AND INVESTMENT FUNCTIONS.
  (A)  SUBJECT TO ANY SPECIFIC LIMITATION SET FORTH IN A GIFT INSTRUMENT
OR IN LAW OTHER THAN THIS ARTICLE, AN INSTITUTION  MAY  DELEGATE  TO  AN
EXTERNAL AGENT THE MANAGEMENT AND INVESTMENT OF AN INSTITUTIONAL FUND TO
THE  EXTENT  THAT  AN  INSTITUTION  COULD  PRUDENTLY  DELEGATE UNDER THE
CIRCUMSTANCES. AN INSTITUTION SHALL ACT IN GOOD  FAITH,  WITH  THE  CARE
THAT  AN  ORDINARILY  PRUDENT  PERSON  IN A LIKE POSITION WOULD EXERCISE
UNDER SIMILAR CIRCUMSTANCES, IN:
  (1) SELECTING AN AGENT;
  (2) ESTABLISHING THE SCOPE AND TERMS OF THE DELEGATION, INCLUDING  THE
PAYMENT OF COMPENSATION, CONSISTENT WITH THE PURPOSES OF THE INSTITUTION
AND THE INSTITUTIONAL FUND; AND
  (3) PERIODICALLY REVIEWING THE AGENT'S ACTIONS IN ORDER TO MONITOR THE
AGENT'S  PERFORMANCE  AND  COMPLIANCE  WITH  THE  SCOPE AND TERMS OF THE
DELEGATION.
  (B) IN PERFORMING A DELEGATED FUNCTION, AN AGENT OWES A  DUTY  TO  THE
INSTITUTION  TO  EXERCISE  REASONABLE  CARE TO COMPLY WITH THE SCOPE AND
TERMS OF THE DELEGATION.
  (C) AN INSTITUTION THAT COMPLIES WITH PARAGRAPH (A) OF THIS SECTION IS
NOT LIABLE FOR THE DECISIONS OR ACTIONS OF AN AGENT TO WHICH  THE  FUNC-
TION WAS DELEGATED.
  (D)  BY  ACCEPTING  DELEGATION  OF A MANAGEMENT OR INVESTMENT FUNCTION
FROM AN INSTITUTION THAT IS SUBJECT TO THE LAWS OF THIS STATE, AN  AGENT
SUBMITS  TO  THE  JURISDICTION  OF  THE  COURTS  OF  THIS  STATE  IN ALL
PROCEEDINGS ARISING FROM OR RELATED TO THE DELEGATION OR THE PERFORMANCE
OF THE DELEGATED FUNCTION.
  (E) EACH CONTRACT, IF ANY, PURSUANT TO WHICH AUTHORITY IS SO DELEGATED
SHALL PROVIDE THAT IT MAY BE TERMINATED BY THE INSTITUTION AT ANY  TIME,
WITHOUT PENALTY, UPON NOT MORE THAN SIXTY DAYS NOTICE.
  (F) AN INSTITUTION MAY DELEGATE MANAGEMENT AND INVESTMENT FUNCTIONS TO
ITS COMMITTEES, OFFICERS, OR EMPLOYEES AS AUTHORIZED BY THE LAWS OF THIS
STATE  OTHER THAN THIS ARTICLE, AS SET FORTH IN, INTER ALIA, SECTION 514
(DELEGATION OF INVESTMENT MANAGEMENT).
  (G) NOTHING IN THIS ARTICLE SHALL IMPAIR THE OPERATION OF SECTION  717
(DUTY OF DIRECTORS AND OFFICERS).
S 555. RELEASE  OR  MODIFICATION  OF RESTRICTIONS ON MANAGEMENT, INVEST-
         MENT, OR PURPOSE.
  (A) IF THE DONOR CONSENTS IN A RECORD, AN INSTITUTION MAY  RELEASE  OR
MODIFY,  IN  WHOLE OR IN PART, A RESTRICTION CONTAINED IN A GIFT INSTRU-

A. 7907--C                          6

MENT ON THE MANAGEMENT, INVESTMENT, OR PURPOSE OF AN INSTITUTIONAL FUND.
A RELEASE OR MODIFICATION MAY NOT ALLOW A FUND TO BE USED FOR A  PURPOSE
OTHER THAN A CHARITABLE PURPOSE OF THE INSTITUTION.
  (B)  A  COURT,  UPON  APPLICATION  OF  AN  INSTITUTION,  MAY  MODIFY A
RESTRICTION CONTAINED IN A GIFT INSTRUMENT REGARDING THE  MANAGEMENT  OR
INVESTMENT  OF  AN  INSTITUTIONAL  FUND  IF  THE  RESTRICTION HAS BECOME
IMPRACTICABLE OR WASTEFUL, IF IT IMPAIRS THE MANAGEMENT OR INVESTMENT OF
THE FUND, OR IF, BECAUSE OF CIRCUMSTANCES NOT ANTICIPATED BY THE  DONOR,
A  MODIFICATION  OF A RESTRICTION WILL FURTHER THE PURPOSES OF THE FUND.
THE INSTITUTION SHALL NOTIFY THE DONOR, IF AVAILABLE, AND  THE  ATTORNEY
GENERAL  OF  THE  APPLICATION, AND THE ATTORNEY GENERAL MUST BE GIVEN AN
OPPORTUNITY TO BE HEARD. TO THE  EXTENT  PRACTICABLE,  ANY  MODIFICATION
MUST BE MADE IN ACCORDANCE WITH THE DONOR'S PROBABLE INTENTION.
  (C)  IF  A  PARTICULAR  PURPOSE  OR  A RESTRICTION CONTAINED IN A GIFT
INSTRUMENT ON THE USE OF AN INSTITUTIONAL FUND BECOMES UNLAWFUL, IMPRAC-
TICABLE, IMPOSSIBLE TO ACHIEVE, OR WASTEFUL, THE COURT, UPON APPLICATION
OF AN INSTITUTION, MAY MODIFY THE PURPOSE OF THE FUND OR THE RESTRICTION
ON THE USE OF  THE  FUND  IN  A  MANNER  CONSISTENT  WITH  THE  PURPOSES
EXPRESSED  IN  THE  GIFT  INSTRUMENT.  THE  INSTITUTION SHALL NOTIFY THE
DONOR, IF AVAILABLE, AND THE ATTORNEY GENERAL OF  THE  APPLICATION,  AND
THE ATTORNEY GENERAL MUST BE GIVEN AN OPPORTUNITY TO BE HEARD.
  (D)(1)  IF AN INSTITUTION DETERMINES THAT A RESTRICTION CONTAINED IN A
GIFT INSTRUMENT ON THE MANAGEMENT, INVESTMENT, OR PURPOSE OF AN INSTITU-
TIONAL FUND IS UNLAWFUL, IMPRACTICABLE, IMPOSSIBLE TO ACHIEVE, OR WASTE-
FUL, THE INSTITUTION, NINETY DAYS AFTER  NOTIFICATION  TO  THE  ATTORNEY
GENERAL, MAY RELEASE OR MODIFY THE RESTRICTION, IN WHOLE OR PART, IF:
  (A)  THE  INSTITUTIONAL  FUND  SUBJECT  TO THE RESTRICTION HAS A TOTAL
VALUE OF LESS THAN TWO HUNDRED FIFTY THOUSAND DOLLARS;
  (B) MORE THAN TWENTY YEARS HAVE ELAPSED  SINCE  THE  FUND  WAS  ESTAB-
LISHED; AND
  (C)  THE INSTITUTION USES THE PROPERTY IN A MANNER CONSISTENT WITH THE
PURPOSES EXPRESSED IN THE GIFT INSTRUMENT.
  (2) NOTICE TO THE ATTORNEY GENERAL SHALL CONTAIN: (A)  AN  EXPLANATION
OF  (I)  THE  INSTITUTION'S DETERMINATION THAT THE RESTRICTION MEETS THE
REQUIREMENTS SET FORTH IN SUBPARAGRAPH ONE OF THIS  PARAGRAPH  AND  (II)
THE  PROPOSED  RELEASE  OR  MODIFICATION;  (B) A COPY OF A RECORD OF THE
INSTITUTION APPROVING THE RELEASE OR MODIFICATION; AND (C)  A  STATEMENT
OF  THE  PROPOSED  USE  OF  THE INSTITUTIONAL FUND AFTER SUCH RELEASE OR
MODIFICATION.
  (3) IF THE ATTORNEY GENERAL DOES NOT  NOTIFY  THE  INSTITUTION  WITHIN
NINETY  DAYS,  THE INSTITUTION MAY PROCEED WITH THE RELEASE OR MODIFICA-
TION.
  (4) NOTICE SHALL ALSO BE GIVEN TO THE DONOR, AS DEFINED  IN  PARAGRAPH
(A-1)  OF  SECTION  551  (DEFINITIONS), IF AVAILABLE, PROVIDED, HOWEVER,
THAT SUCH NOTICE SHALL NOT BE REQUIRED FOR FUNDS DESCRIBED IN CLAUSE (B)
OF SUBPARAGRAPH TWO OF PARAGRAPH (D) OF SECTION 553  (APPROPRIATION  FOR
EXPENDITURE OR ACCUMULATION OF ENDOWMENT FUND; RULES OF CONSTRUCTION).
  (E)  FOR  PURPOSES  OF  THIS  SECTION, AN INSTITUTION MAY APPLY TO THE
FOLLOWING COURTS TO RELEASE OR MODIFY A RESTRICTION CONTAINED IN A  GIFT
INSTRUMENT:
  (1) TO THE SUPREME COURT OF THE JUDICIAL DISTRICT WHEREIN THE INSTITU-
TION  HAS ITS OFFICE OR PRINCIPAL PLACE OF CARRYING OUT THE PURPOSES FOR
WHICH IT WAS FORMED; OR
  (2) WHERE THE APPLICABLE GIFT INSTRUMENT IS A WILL, TO THE SURROGATE'S
COURT IN WHICH SUCH WILL IS PROBATED.

A. 7907--C                          7

  (F) THIS SECTION SHALL NOT LIMIT THE APPLICATION OF THE DOCTRINE OF CY
PRES.
S 556. REVIEWING COMPLIANCE.
  COMPLIANCE WITH THIS ARTICLE SHALL BE DETERMINED IN LIGHT OF THE FACTS
AND  CIRCUMSTANCES  EXISTING AT THE TIME A DECISION IS MADE OR ACTION IS
TAKEN, AND NOT RETROSPECTIVELY.
S 557. APPLICATION TO EXISTING INSTITUTIONAL FUNDS.
  THIS ARTICLE SHALL APPLY TO INSTITUTIONAL FUNDS EXISTING ON OR  ESTAB-
LISHED  AFTER THE EFFECTIVE DATE OF THIS ARTICLE. AS APPLIED TO INSTITU-
TIONAL FUNDS EXISTING ON THE EFFECTIVE DATE OF THIS ARTICLE, THIS  ARTI-
CLE  SHALL  GOVERN ONLY DECISIONS MADE OR ACTIONS TAKEN ON OR AFTER THAT
DATE.
S 558. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE
         ACT.
  THIS ARTICLE MODIFIES, LIMITS, AND SUPERSEDES  THE  ELECTRONIC  SIGNA-
TURES  IN  GLOBAL  AND  NATIONAL COMMERCE ACT, 15 U.S.C. SECTION 7001 ET
SEQ., BUT DOES NOT MODIFY, LIMIT, OR SUPERSEDE SECTION 101 OF THAT  ACT,
15  U.S.C.  SECTION  7001(A), OR AUTHORIZE ELECTRONIC DELIVERY OF ANY OF
THE NOTICES DESCRIBED IN SECTION 103 OF  THAT  ACT,  15  U.S.C.  SECTION
7003(B).
  S  2.  Subparagraphs  13,  14  and 17 of paragraph (a) of section 102,
section 512, paragraphs (c) and (d) of section 513, and section  522  of
the not-for-profit corporation law are REPEALED.
  S  3.  The  closing subparagraph of paragraph (a) and paragraph (b) of
section 406 of the not-for-profit corporation law, as added  by  chapter
331 of the laws of 1971, are amended to read as follows:
Except  as  provided  in  paragraph (b), this paragraph applies notwith-
standing any other provision of the certificate of incorporation or  any
direction  in [an] A GIFT instrument [referred to in section 513 (Admin-
istration of assets received for specific purposes)].
  (b) Paragraph (a) shall not apply to the extent that it conflicts with
any mandatory direction in [an]  A  GIFT  instrument  [by  which  assets
referred to in section 513 were transferred to the corporation] EXECUTED
prior  to  the  effective  date  of this section unless such conflicting
direction is  removed  as  impracticable  under  article  eight  of  the
estates,  powers  and trusts law or in any other manner provided by law.
The absence of a specific provision in the [section 513 instrument] GIFT
INSTRUMENT for the current use of the principal  of  the  fund,  or  the
presence  in such an instrument of a provision, as to the principal of a
fund, limited to the principal's being held, invested and reinvested, is
not such a conflicting mandatory direction.
  S 4. Section 406 of the not-for-profit corporation law is  amended  by
adding a new paragraph (e) to read as follows:
  (E)  FOR PURPOSES OF THIS SECTION, THE TERM GIFT INSTRUMENT SHALL HAVE
THE MEANING SET FORTH IN SECTION 551 (DEFINITIONS).
  S 5. Paragraph (b) of section 513 of  the  not-for-profit  corporation
law,  as  amended by chapter 690 of the laws of 1978, is amended to read
as follows:
  (b) Except as may be otherwise permitted under article  eight  of  the
estates,  powers and trusts law or section [522 (Release of restrictions
on use or investment)] 555 (RELEASE OR MODIFICATION OF  RESTRICTIONS  ON
MANAGEMENT, INVESTMENT, OR PURPOSE), the governing board shall apply all
assets thus received to the purposes specified in the gift instrument AS
DEFINED  IN  SECTION 551 (DEFINITIONS) and to the payment of the reason-
able and proper expenses of administration of such assets. The governing
board shall cause accurate accounts to be kept of such  assets  separate

A. 7907--C                          8

and  apart from the accounts of other assets of the corporation.  Unless
the terms of the particular gift instrument provide otherwise, the trea-
surer shall make an annual report to the members (if there  be  members)
or to the governing board (if there be no members) concerning the assets
held  under  this  section  and  the  use made of such assets and of the
income thereof.
  S 6. Paragraph (a) of section 514 of  the  not-for-profit  corporation
law,  as added by chapter 690 of the laws of 1978, is amended to read as
follows:
  (a) Except as otherwise provided by the applicable gift instrument  AS
DEFINED  IN  SECTION  551  (DEFINITIONS),  the governing board may [(1)]
delegate to its committees, officers or employees of the corporation  or
the  fund[,  or  agents, including investment counsel,] the authority to
act in place of the governing board in investment  and  reinvestment  of
institutional funds[, (2) contract with independent investment advisors,
investment  counsel  or  managers, banks, or trust companies, so to act,
and (3) authorize the payment of compensation for investment advisory or
management services, advisors, investment counsel or managers, banks  or
trust  companies,  so  to  act] AS DEFINED IN SECTION 551 (DEFINITIONS).
Each contract, IF ANY, pursuant to which authority is so delegated shall
provide that it may be terminated by the governing board  at  any  time,
without  penalty,  upon  not  more  than sixty days' notice. SECTION 554
(DELEGATION  OF  MANAGEMENT  AND  INVESTMENT  FUNCTIONS)  SHALL   GOVERN
EXTERNAL DELEGATION.
  S  7.  Paragraph  (a) of section 717 of the not-for-profit corporation
law, as amended by chapter 690 of the laws of 1978, is amended  to  read
as follows:
  (a) Directors and officers shall discharge the duties of their respec-
tive  positions  in  good faith and with [that degree of diligence, care
and skill which ordinarily prudent  men  would  exercise  under  similar
circumstances  in  like positions] THE CARE AN ORDINARILY PRUDENT PERSON
IN A LIKE POSITION WOULD EXERCISE UNDER SIMILAR CIRCUMSTANCES.  [In  the
administration  of the powers to make and retain investments pursuant to
section 512 (Investment authority), to appropriate appreciation pursuant
to  section  513  (Administration  of  assets  received   for   specific
purposes), and to delegate] THE FACTORS SET FORTH IN SUBPARAGRAPH ONE OF
PARAGRAPH  (E)  OF  SECTION  552  (STANDARD  OF  CONDUCT IN MANAGING AND
INVESTING AN INSTITUTIONAL FUND), IF RELEVANT, MUST BE CONSIDERED  BY  A
GOVERNING  BOARD DELEGATING investment management of institutional funds
pursuant to  section  514  (Delegation  of  investment  management)[,  a
governing  board  shall consider among other relevant considerations the
long and short term  needs  of  the  corporation  in  carrying  out  its
purposes,  its  present and anticipated financial requirements, expected
total return on its investments, price level trends, and general econom-
ic conditions] FOR PURPOSES OF THIS PARAGRAPH,  THE  TERM  INSTITUTIONAL
FUND IS DEFINED IN SECTION 551 (DEFINITIONS).
  S  8.  Paragraphs  (c)  and (e) of subdivision 1 of section 2-b of the
religious corporations law, paragraph (c) as amended by chapter  623  of
the  laws  of 1992, paragraph (e) as added by chapter 690 of the laws of
1978, are amended to read as follows:
  (c) The following provisions of  the  not-for-profit  corporation  law
shall  not apply to religious corporations: subparagraphs (7) and (8) of
paragraph (a) of section one hundred twelve, section one  hundred  thir-
teen,  section  one  hundred  fourteen, section two hundred one, section
three hundred three, section three hundred four, section  three  hundred
five,  section  three  hundred  six,  article  four  except section four

A. 7907--C                          9

hundred one, section five hundred fourteen, that portion of section five
hundred [twenty-two (b)] FIFTY-FIVE (B) AND SECTION FIVE HUNDRED  FIFTY-
FIVE  (C)  which  reads  "[The attorney general shall be notified of the
application  and shall be given an opportunity to be heard] THE INSTITU-
TION SHALL NOTIFY THE ATTORNEY  GENERAL  OF  THE  APPLICATION,  AND  THE
ATTORNEY  GENERAL MUST BE GIVEN AN OPPORTUNITY TO BE HEARD", section six
hundred five, section six  hundred  seven,  section  six  hundred  nine,
section  eight  hundred  four,  article nine except section nine hundred
ten, article ten except as provided in section eleven  hundred  fifteen,
section  eleven hundred two, and article fifteen except paragraph (c) of
section fifteen hundred seven.
  (e) No action shall be taken by the trustees of an incorporated  Roman
Catholic  church, or of a Ruthenian Greek Catholic church, under section
five hundred [twenty-two] FIFTY-FIVE of the  not-for-profit  corporation
law [(Release of restrictions on use or investment)] (RELEASE OR MODIFI-
CATION  OF  RESTRICTIONS  ON MANAGEMENT, INVESTMENT, OR PURPOSE) without
the consent of the archbishop or bishop of the  diocese  to  which  such
church  belongs or in case of their absence or inability to act, without
the consent of the vicar general or administrator of such diocese.
  S 9. Paragraph (e) of section 8-1.1 of the estates, powers and  trusts
law,  as  amended by chapter 686 of the laws of 1967, is amended to read
as follows:
  (e) Any accumulation of income from property subject to a  disposition
in trust for a religious, charitable, educational or benevolent purpose,
or  otherwise  acquired  by such trust, shall in all respects, including
its reasonableness, amount and duration, be within the  jurisdiction  of
the supreme court or the surrogate's court, as the case may be. In exer-
cising  such  jurisdiction,  (1)  any accumulation of income which might
otherwise be applied for the purposes of the trust may be prohibited  or
limited,  despite  a valid direction therefor in the trust instrument or
authority therefor under 8-1.7 and  (2)  such  an  accumulation  may  be
authorized  by  order  of  the  court despite the absence of a direction
therefor in the trust instrument.  THIS PARAGRAPH SHALL NOT RESTRICT  IN
ANY  MANNER  THE  ABILITY  TO RELEASE OR MODIFY RESTRICTIONS RELATING TO
INSTITUTIONAL FUNDS UNDER SECTION 555 OF THE NOT-FOR-PROFIT  CORPORATION
LAW.
  S 10. Paragraph (j) of section 8-1.1 of the estates, powers and trusts
law is amended to read as follows:
  (j)  Whenever  a  voluntary  association or committee has received, by
public subscription, a fund for a charitable or benevolent purpose  from
more  than  one  thousand contributors, a portion of which remains unex-
pended after the expiration of five years from the time of its  receipt,
and  it  appears  that  a  literal  compliance  with  the  terms  of the
subscription is impracticable, the  supreme  court  may  make  an  order
directing that such unexpended balance be transferred for administration
and  application  to such domestic corporation as in the judgment of the
court will most effectively accomplish the  general  purpose  for  which
such fund was collected, free from any restriction, limitation or direc-
tion  upon  which the subscription was made; and on the transfer of such
fund to the corporation designated in the order, such voluntary  associ-
ation,  its  officers  and  trustees, or such committee and its officers
shall be fully exonerated and discharged from all liability  to  account
for  such  fund.    THIS  PARAGRAPH SHALL NOT RESTRICT IN ANY MANNER THE
ABILITY TO RELEASE OR  MODIFY  RESTRICTIONS  RELATING  TO  INSTITUTIONAL
FUNDS UNDER SECTION 555 OF THE NOT-FOR-PROFIT CORPORATION LAW.

A. 7907--C                         10

  S  11.  Section 8-1.7 of the estates, powers and trusts law is amended
by adding a new paragraph (b) to read as follows:
  (B)  THIS  SECTION  SHALL NOT RESTRICT IN ANY MANNER THE APPROPRIATION
FOR EXPENDITURE OR ACCUMULATION OF  ENDOWMENT  FUNDS  AS  SET  FORTH  IN
SECTION 553 OF THE NOT-FOR-PROFIT CORPORATION LAW.
  S  12.  Subparagraph  1  of  paragraph  (e)  of  section 11-2.3 of the
estates, powers and trusts law, as added by chapter 609 of the  laws  of
1994, is amended to read as follows:
  (1)  the  term  "trustee" includes a personal representative, trustee,
guardian, donee of a  power  during  minority,  guardian  under  article
eighty-one  of  the  mental hygiene law, committee of the property of an
incompetent person, and conservator of the property  of  a  conservatee,
BUT  DOES NOT INCLUDE AN INSTITUTIONAL FUND AS DEFINED IN SECTION 551 OF
THE NOT-FOR-PROFIT CORPORATION LAW;
  S 13. Subdivision 1 of section 2115 of the surrogate's court procedure
act, as added by chapter 609 of the laws of 1994, is amended to read  as
follows:
  1.  At  any time during the administration of a trust and irrespective
of the pendency of a particular proceeding, the court with  jurisdiction
of  the trust may review the reasonableness of the costs of a delegation
by the trustee under section 11-2.3 of the estates,  powers  and  trusts
law AND UNDER SECTION 554 OF THE NOT-FOR-PROFIT CORPORATION LAW.
  S  14. Subdivision 2 of section 174-b of the executive law, as amended
by chapter 43 of the laws of 2002, is amended to read as follows:
  2. Any solicitation used by or on behalf of any  charitable  organiza-
tion  shall  provide  a clear description of the programs and activities
for which it has requested and has expended or will expend contributions
or shall include therein a statement that, upon request,  a  person  may
obtain from the organization such a description.  IF THE SOLICITATION IS
BY AN INSTITUTION SUBJECT TO ARTICLE FIVE-A OF THE NOT-FOR-PROFIT CORPO-
RATION  LAW, AND IS FOR AN ENDOWMENT FUND, THE SOLICITATION MUST INCLUDE
A STATEMENT THAT, UNLESS OTHERWISE RESTRICTED  BY  THE  GIFT  INSTRUMENT
PURSUANT  TO  PARAGRAPH  (B)  OF SECTION FIVE HUNDRED FIFTY-THREE OF THE
NOT-FOR-PROFIT CORPORATION LAW, THE INSTITUTION MAY EXPEND SO MUCH OF AN
ENDOWMENT FUND AS IT DEEMS PRUDENT AFTER  CONSIDERING  THE  FACTORS  SET
FORTH  IN  PARAGRAPH  (A)  OF  SECTION  FIVE  HUNDRED FIFTY-THREE OF THE
NOT-FOR-PROFIT CORPORATION LAW.
  S 15. If any clause, sentence, paragraph, subdivision, section or part
of this act shall be adjudged by any court of competent jurisdiction  to
be  invalid,  such judgement shall not affect, impair, or invalidate the
remainder thereof, but shall be confined in its operation to the clause,
sentence, paragraph,  subdivision,  section  or  part  thereof  directly
involved  in  the  controversy  in  which such judgement shall have been
rendered. It is hereby declared to be the intent of the legislature that
this act would have been enacted even if such invalid provisions had not
been included herein.
  S 16. This act shall take effect immediately.