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Senate Votes on Allowing Non-Profits to Protect Their Bottom Line
The Senate today voted unanimously in support of Senate Bill 2078, the Uniform Prudent Management of Institutional Funds Act (UPMIFA). 36 states have passed similar legislation, which raises the threshold of responsibility for non-profits in managing their assets, while providing greater flexibility to these organizations in managing their endowments.
Charitable organizations in Massachusetts have been pressing for passage of UPMIFA by the end of the fiscal year on June 30, so that they may access its benefits and avoid unnecessary layoffs and liquidation of assets. “Due to the dire nature of our economy, non-profits are seeing a drastic decline in donations and funding. This is further exacerbated by the outdated restrictions on the endowments they receive.
This legislation will update those laws and by doing that will help save jobs and protect the services these organizations provide. Our non-profits and the people who work for them provide assistance and services that are critical to the people of the Commonwealth,” said Senate President Therese Murray.
The bill, filed by Senator Robert O’Leary (D-Barnstable), allows a charitable organization to focus more on the preservation of their organization and not focus on solely preserving their endowments, as current law states. It modernizes the rules governing expenditures from endowment funds, both to provide stricter guidelines on spending from endowment funds and to give institutions the ability to cope more easily with fluctuations in the value of the endowment. It also updates the provisions governing the release and modification of restrictions on charitable funds to permit more efficient management of these funds.
“This is going to be a life saver for the many non-profits that employ thousands of our constituents across the state,” said Senator O’Leary (D-Barnstable). “Allowing our non-profits better access to money they already have, while maintaining appropriate state oversight of spending is the best thing we can be doing to help our non-profits help themselves.”
Thirteen
percent
of Massachusetts workers are employed in the non-profit sector, which includes healthcare institutions, colleges and universities, charities, conservation groups and others. The financial crisis has hit these organizations in the Commonwealth and across the nation through capital losses on endowments and decreases in charitable donations. Most non-profits rely on private donations to help maintain their bottom line, but all too often, those donations come with hefty strings attached, leaving non-profits saddled with money they cannot spend or invest for the benefit or preservation of the whole institution. “This will help Mass Audubon and other nonprofits in Massachusetts weather the storm. We are appreciative of Senate President Murray and Senator O’Leary’s leadership and recognition that this has to happen now” said Jack Clarke, Mass Audubon’s Director of Public Policy and Government Relations.
"Sea Education Association in Woods Hole is extremely grateful to Senate President Murray and the members of the Senate for such quick work passing UPMIFA,” Said John Bullard, President of the Sea Education program at Woods Hole Oceanographic Institution. “The passage of this legislation by June 30th is extremely important to SEA and our 40 employees and many other non- profits who have been hammered by the economy. With so many other demands on her time, it is gratifying that the Senate President can be so responsive to need. We look forward to similarly quick passage in the House and signature by the Governor."
UPMIFA will help non-profits diversify their portfolios and invest more wisely while providing guidance and authority to charitable organizations on the management of their funds. It will also impose additional duties to those managing charitable funds, providing additional protections for charities and protecting the interests of donors who want to see their contributions used wisely. In addition, UPMIFA does the following:
Provides guidance and authority to charitable organizations on the management of their funds, and imposes additional duties to those managing charitable funds, providing additional protections for charities and protect the interests of donors who want to see their contributions used wisely.
Modernizes the rules governing expenditures from endowment funds, both to provide stricter guidelines on spending from endowment funds and to give institutions greater ability to adjust with fluctuations in the value of the endowment. Updates the provisions governing the release and modification of restrictions on charitable funds to permit more efficient management of these funds. Requires institutions to make several considerations prior to an expenditure of funds, including donor intent, market conditions, other available assets, and the charity’s portfolio.
The bill now goes to the House of Representatives for further action. |
