KRS 273.610: Appropriation for expenditure or accumulation of endowment -- Rules of

construction.

(1) 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 th e

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 f or 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) The duration and preservation of the endowment fund;

(b) The purposes of the institution and the endowment fund;

(c) General economic conditions;

(d) The possible effect of inflation or deflation;

(e) The expected total return from income and the appreciation of investments;

(f) Other resources of the institution; and

(g) The investment policy of the institution.

(2) To limit the authority to appropriate for expenditure or accumulate under subsection

(1) of this section, a gift instrument must specifically state the limitation.

(3) 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:

(a) Create an endowment fund of permanent duration unless other language in the

gift instrument limits the duration or purpose of the fund; and

(b) Do not otherwise limit the authority to appropriate for expenditure or

accumulate under subsection (1) of this section.