                                 CODE OF VIRGINIA

APPROPRIATION FOR EXPENDITURE OR ACCUMULATION OF ENDOWMENT FUND; RULES OF
CONSTRUCTION (§ 64.2-1102)

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 established. 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 accumulate under
subsection A, a gift instrument shall specifically state the limitation.

C. Terms in a gift instrument designating a gift as an endowment, or a direction
or authorization in the gift instrument to use only &#8220;income,&#8221;
&#8220;interest,&#8221; &#8220;dividends,&#8221; or &#8220;rents, issues, or
profits,&#8221; or &#8220;to preserve the principal intact,&#8221; or words of
similar import:

   1. Create an endowment fund of permanent duration unless other language in the
   gift instrument limits the duration or purposes of the fund; and

   2. Do not otherwise limit the authority to appropriate for expenditure or
   accumulate under subsection A.

HISTORY: 1973, c. 167, §§ 55-268.2, 55-268.3; 2008, c. 184, § 55-268.14;
2012, c. 614.