UPMIFA. Now UPMIFA is an acronym for the Uniform Prudent Management of Institutional Funds Act. Now this act revises or builds upon a prior act from 1972 called the Uniform Management of Institutional Funds Act, and it brings the laws governing charitable institutions, endowments, in line with modern investment and expenditure practice. Now, the updates mainly relate to guidelines for spending, how much and on what, are these institutions allowed to spend on, and rules around investment. Now, the new doctrine incorporates the experience gained in the last 35 years or so, by providing even stronger guidance for investment management, and a more exact set of rules for investing in a prudent manner. Now, let's go through some of those updates in more detail. First of all, it details guidance for investment conduct, and actually gives more detailed and stronger guidance. It highlights the fiduciary responsibility of each of these institutions to manage cost, manage investments, not in isolation, but from a total portfolio perspective, a requirement to diversify as any prudent investor would, and to consider the risk tolerance of that institution, which means having risk and return objectives reasonably suited to the fund spending. Now, the new doctrine gave more guidance and flexibility on how these institutions can spend their assets. It introduced the concept of total return expenditures, which means that these institutions are allowed to both spend appreciation of capital assets and income in a prudent manner. The prior guidance and act only allowed for the expenditure of income, or only allowed them to spend interest in dividends. And lastly, modifications of restrictions. So it allows charities to ask a court to approve a modification on a restriction that has been in place within that institution. Sometimes a restriction is imposed by a donor to the funds, and over time, it becomes impractical or or even wasteful to continue with that restriction. The donor, in theory, could release the restriction, but if the donor is no longer alive or no longer able to, the charity or the endowment can ask a court to make a modification on that restriction, which was not allowed under the previous doctrine.
