Unit #5 Flashcards
(11 cards)
What is the UPIA and what is its intent
Uniform Prudent Investor Act. Under prior law for fiduciaries, risky assets were prohibited. Now, the standard is modern portfolio theory.
What is UPMIFA
Uniform Prudent Management of Institutional Funds Act — nonprofit can exercise prudence and discretion in making distribution of funds from endowment into programs. Mandates prudent investor standard for investment of
endowments as opposed to the earlier “prudent man” rule
What institutional funds act is in place in most states and what did it replace?
UPMIFA. It replaced UMIFA, Uniform Management of
Institutional Funds Act. UMIFA limits spending to the value of
the fund value above its original value
The UPMIFA allows deviation from expressed donor intent in how many circumstances? What are those circumstances?
- Donor release, 2. Doctrine of deviation, 3. Cy pres, and 4. Small funds (funds less than $25,000 in place for over 20 years)
What is a reverter in a gift agreement?
Donor receives money back if donor intent is not fulfilled.
What does FASB 2016 clarify?
- The nonprofits use of restricted funds and 2. The nonprofit’s liquidity, considering that restricted funds can only be used for the restricted purpose.
For accounting purposes, FASB says there are how many different ways at looking at the money?
- Unrestricted — you can spend as you want and 2. Restricted by the donor — you cannot spend as you want
FASB wants to ensure what?
Boards, donors, and financial institutions can see what funds are available for operations.
What is FASB?
Financial Accounting Standards Board. It is an independent, private-sector organization in the United States that is responsible for establishing and improving financial accounting and reporting standards for private and public companies, as well as not-for-profit organizations.
