UPMIFA clearly states that those who manage funds for a charity should adhere to the following guidelines:
Give primary consideration to donor intent as expressed in a gift instrument.
Act in good faith, with the care an ordinarily prudent person would exercise.
Incur only reasonable costs in investing and managing charitable funds.
Make a reasonable effort to verify relevant facts.
Make decisions about each asset in the context of the portfolio of investments, as part of an overall investment strategy.
Diversify investments unless, due to special circumstances, the purposes of the fund are better served without diversification.
Dispose of unsuitable assets.
In general, develop an investment strategy appropriate for the fund and the charity.
Following these guidelines allows advisors to add tremendous value to institutional and nonprofit clients and help ensure the organizations they work with will be providing services for many years to come.
Tiya Lim is director of institutional advisory services for BAM Advisor Services, which provides back-office services to RIA firms across the country.