Section 59-21-03 - Appropriation for expenditure or accumulation of endowment fund - Rules of construction1. Subject to the intent of a donor, as expressed in the gift instrument and subject to subsection 4, an institution may appropriate for expenditure or accumulate so much of an endowment fund as the institution determines is prudent for the uses, benefits, purposes, and duration for which the endowment fund is established. Unless stated otherwise in the gift instrument, the assets in an endowment fund are donor-restricted assets until appropriated for expenditure by the institution. In making a determination to appropriate or accumulate, the institution shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and shall consider, if relevant, the following factors: a. The duration and preservation of the endowment fund;b. The purposes of the institution and the endowment fund;c. General economic conditions;d. The possible effect of inflation or deflation;e. The expected total return from income and the appreciation of investments;f. Other resources of the institution; andg. The investment policy of the institution.2. To limit the authority to appropriate for expenditure or accumulate under subsection 1, a gift instrument specifically must state the limitation.3. Terms in a gift instrument designating a gift as an endowment, or a direction or authorization in the gift instrument to use only income, interest, dividends, or rents, issues, or profits, or to preserve the principal intact, or words of similar import create an endowment fund of permanent duration unless other language in the gift instrument limits the duration or purpose of the fund and do not otherwise limit the authority to appropriate for expenditure or accumulate under subsection 1.4. The appropriation for expenditure in any year of an amount greater than seven percent of the fair market value of an endowment fund, calculated on the basis of market values determined at least quarterly and averaged over a period of not less than three years immediately preceding the year in which the appropriation for expenditure is made, creates a rebuttable presumption of imprudence. For an endowment fund in existence for fewer than three years, the fair market value of the endowment fund must be calculated for the period the endowment fund has been in existence. This subsection does not:a. Apply to an appropriation for expenditure permitted under law other than this chapter or by the gift instrument; orb. Create a presumption of prudence for an appropriation for expenditure of an amount less than or equal to seven percent of the fair market value of the endowment fund.