Draft Net Appreciation (Total Return) Policy Guidance Issued by the Division of Cemeteries, Part II

This is the second post in our continuing discussion of the draft guidance issued by the Division of Cemeteries. It will look at Prudent Management of Institutional Funds Act Analysis.

Under the PMIFA, in deciding whether to appropriate net appreciation, a cemetery must act “in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances,” and must 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;

(7) Where appropriate and circumstances would otherwise warrant, alternatives to expenditure of the endowment fund, giving due consideration to the effect that such alternatives may have on the institution; and

(8) The investment policy of the institution.

NPCL § 553(a)(1)-(8). If you wanted to know more about how these provisions are applied, the full copy of the draft regulations have a helpful explanation of how the above eight factors work in context of a cemetery.

Powered by 123ContactForm | Report abuse