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HB 6207

Businesses: charitable organizations; rebuttable presumption of imprudence for certain expenditures from an endowment fund; provide for. Amends sec. 4 of 2009 PA 87 (MCL 451.924).

2025-2026 Regular Session Introduced by Timmy Beson and 3 co-sponsors

Sets an 8% annual endowment spend threshold—any yearly draw above 8% is presumed imprudent, with exceptions for donor instruments and other laws.

bill electronically reproduced 07/03/2026
#businesses:charitableorganizations #businesses:nonprofitcorporations
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WeVote Research Nonpartisan
Bill Summary · HB 6207

Overview

HB 6207 (Michigan, 2025-2026) introduces a rebuttable presumption of imprudence for annual endowment fund appropriations that exceed 8% of the fund’s fair market value. It amends the Uniform Prudent Management of Institutional Funds Act (UPMIFA) as codified in 2009 PA 87 (MCL 451.924). The bill aims to curb potentially imprudent expenditure levels from endowment funds by creating a presumption that larger-than-8% annual expenditures are imprudent, subject to the donor’s gift instrument and other statutory carve-outs.

What the bill does (key provisions)

  • Amends Section 4 of UPMIFA (MCL 451.924) to govern annual appropriations for expenditure from endowment funds.
  • Establishes a rebuttable presumption of imprudence if, in any given year, the appropriation for expenditure exceeds 8% of the endowment fund’s fair market value.
    • Calculation details:
    • Use fair market value determined at least quarterly.
    • Average the values over a period of not less than 3 years immediately preceding the year of the appropriation.
    • For new endowment funds (existing fewer than 3 years):
    • Use the period the fund has been in existence to calculate the average FMV.
  • Exceptions and clarifications:
    • The 8% presumption does not apply to appropriations permitted under laws other than this act or under the donor gift instrument.
    • The presumption does not create a presumption of prudence for expenditures of 8% or less.
    • The donor gift instrument may impose limitations that override or modify the 8% presumption (i.e., an instrument-specific limitation remains valid).
    • The donor’s intent, as expressed in the gift instrument, and subsection (4) considerations still apply to determine prudence.

Who and what is affected

  • Endowment fund managers and governing boards of Michigan institutions that hold endowment funds governed by UPMIFA.
  • Endowment donors and the terms of their gift instruments, since donor intent can modify how expenditures are judged under the 8% rule.
  • Financial officers and investment committees responsible for annual budgeting and endowment draw policies.
  • The bill applies specifically to annual appropriations for expenditure (i.e., distributions or spending from endowment funds) and does not alter expenditures permitted under other laws or under the gift instrument.

Procedural and timeline aspects

  • Introduced July 3, 2026, by Rep. Nancy Jenkins-Arno (and co-sponsored by Reps. Beson, Frisbie, and Neyer).
  • Referred to the House Committee on Finance for consideration.
  • The calculation methodology requires quarterly FMV determinations and a 3-year average (or the actual period of existence for newer funds) to establish the 8% threshold.
  • The presumption is rebuttable, meaning the institution can present evidence to show imprudence should be rebutted or that the expenditure was prudent despite exceeding 8%.

Practical implications and potential effects

  • Aligns endowment spending practices with a clearer quantitative threshold, potentially reducing aggressive distributions in years with favorable market conditions and preserving principal.
  • Creates a formal risk-management trigger that boards must anticipate in annual budgeting and payout policy design.
  • May incentivize revisions to gift instruments that aim to permit higher or lower distributions or to include explicit spend-down provisions.
  • Might require institutions to enhance reporting and documentation around endowment fund valuations, averaging methodology, and the basis for annual expenditures.

If you’d like, I can tailor this summary to a particular audience (e.g., corporate endowment managers, nonprofit finance teams, or policymakers) or add a comparison to current Michigan endowment spending practices.

Compiled from official sources — confirm details with the bill’s official record.

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