As charitable organizations face a new set of fiduciary requirements, Roland|Criss has been appointed registrar of a recently published fiduciary conduct guide for foundations and endowments. Roland|Criss, based in Arlington, Texas, is an advisor to fiduciaries and fiduciary service providers.
The new fiduciary requirements for charitable organizations are embodied in the Uniform Prudent Management of Institutional Funds Act (UPMIFA), a template for state law to regulate investment decisions and endowment expenditures for the charitable organizations within its scope.
Drafted in 2006, UPMIFA has been enacted into law in all 50 states and the District of Columbia, Roland|Criss’s executive vice president Ronald Hagan said in a telephone interview with AdvisorOne.
“The states were prompted to act because of concerns over inconsistent behaviors among individuals who sit as trustees on funds donated by charitable persons and organizations,” Hagan said. Anecdotal evidence showed that the trustees needed to be brought into line, he said. “And the exclamation point on that is the impact of the Madoff scandal in the foundation community. It’s estimated $25 billion of the $30 billion Madoff made off with was taken from foundations.”
Developed in response to UPMIFA, the newly published Stewardship Excellence Guidelines for Endowments and Foundations(the standard) will serve as a conduct guide for foundations and endowments. The standard specifies objectives and steps that enable nonprofit charitable trusts to develop and implement a management system that conforms to the “prudent process” requirements defined by UPMIFA.
It takes into account ethical requirements to which endowments and foundations subscribe, and information about significant legal aspects of the nonprofit environment that enable an organization to meet or exceed industry best practices.
The standard was created and approved by a task force of the international standards organization Investment Fiduciary Leadership Council (IFLC). Hagan serves in a voluntary, unpaid capacity as chairman of the IFLC’s board, and he was a member of the task force.