Massachusetts General Laws
Chapter 180a - Uniform Prudent Management of Institutional Funds
Section 2 - Standard of Conduct in Managing and Investing an Institutional Fund

Section 2. (a) Subject to the intent of a donor expressed in a gift instrument, an institution, in managing and investing an institutional fund, shall consider the charitable purposes of the institution and the purposes of the institutional fund.
(b) In addition to complying with the duty of loyalty imposed by law other than this chapter, each person responsible for managing and investing an institutional fund shall manage and invest the fund in good faith and with the care that an ordinarily prudent person in a like position would exercise under similar circumstances.
(c) In managing and investing an institutional fund, an institution:
(1) may incur only costs that are appropriate and reasonable in relation to the assets, the purposes of the institution and the skills available to the institution;
(2) except as otherwise provided by a gift instrument, shall allocate those costs on a reasonable basis to each institutional fund prior to any appropriation; and
(3) shall make a reasonable effort to verify facts relevant to the management and investment of the fund.
(d) An institution may pool 2 or more institutional funds for purposes of management and investment.
(e)(1) Except as otherwise provided by a gift instrument, the rules set forth in this subsection shall apply.
(2) In managing and investing an institutional fund, the following factors, if relevant, shall be considered:
(i) general economic conditions;
(ii) the possible effect of inflation or deflation;
(iii) the expected tax consequences, if any, of investment decisions or strategies;
(iv) the role that each investment or course of action plays within the overall investment portfolio of the fund;
(v) the expected total return from income and the appreciation of investments;
(vi) other resources of the institution;
(vii) the needs of the institution and the fund to make distributions and to preserve capital; and
(viii) an asset's special relationship or special value, if any, to the charitable purposes of the institution.
(3) Management and investment decisions about an individual asset shall not be made in isolation but shall be made in the context of the institutional fund's portfolio of investments as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the fund and to the institution.
(4) Except as provided by any other general or special law, an institution may invest in any kind of property or type of investment consistent with this section.
(5) An institution shall diversify the investments of an institutional fund unless the institution reasonably determines that, because of special circumstances, the purposes of the fund will be better served without diversification.
(6) Within a reasonable time after receiving property, an institution shall make and carry out decisions concerning the retention or disposition of the property or to rebalance a portfolio in order to bring the institutional fund into compliance with the purposes, terms and distribution requirements of the institution as necessary to meet other circumstances of the institution and the requirements of this chapter.
(7) A person who has special skills or expertise or who is selected in reliance upon the person's representation that the person posesses special skills or expertise shall have a duty to use those skills or that expertise in managing and investing institutional funds.