Representative Jon Riki Karamatsu
House Journal Written Remarks
May 5, 2009 – Day 59
Conf. Comm. Rep. No. 18
H.B. No. 618, S.D. 2, C.D. 1
Relating to the Uniform Prudent Management of Institutional Funds Act
I rise in support of House Bill 618, Senate Draft 2, Conference Draft 1, relating to the Uniform Prudent Management of Institutional Funds Act.
The purpose of this bill is to enact the Uniform Prudent Management of Institutional Funds Act to conform the law governing the spending of charitable endowment funds with modern investment and expenditure practices.
Hawaii law prohibits charities from expending endowment funds that fall below the principal of the endowment (historic dollar value). However, under current economic conditions, many endowments may be below their historic dollar value, preventing charities from funding their various programs.
Under this bill, allowable endowment fund expenditures are based upon the value of the fund’s entire portfolio, rather than its historic dollar value. This improves the ability of charities to address fluctuations in the value of the endowment.
This bill also streamlines the process for releasing restrictions on the management, investment, or purpose of endowment funds that do not exceed certain value thresholds. Charities will be able to release these restrictions without court approval if the value of the fund is below $250,000 and after obtaining the Attorney General’s consent. For funds with a value of less than $50,000, the charity may release restrictions without court approval after providing notice to the Attorney General. Thank you.
JON RIKI KARAMATSU 