by Robert Wiener
NJJN Staff Writer

June 18, 2009

Gov. Jon Corzine signed a bill June 6 that will enable foundations in New Jersey to continue funding nonprofit organizations, whether or not their own assets have declined severely.

The Uniform Prudent Management of Investment Funds Act was pressed by a multicultural coalition that included the State Association of Jewish Federations.

The bill was passed unanimously in both houses of the State Legislature.

Under a previous law, foundations were not allowed use of their endowment money “if the endowment’s worth had decreased to a point below its initial historic value,” said State Association executive director Jacob Toporek.

“Previously, if you set up an endowment at $1 million and it is now worth $500,000, you could not use those funds,” he explained. “When the stock market collapsed, a lot of funds lost their value, and there was an outcry throughout the country from nonprofits, including Jewish federations.”

The federations’ endowment directors caucused last month and discovered that other states had already passed laws permitting foundations to spend those so-called “underwater funds” in a careful manner.

“What it means is those funds are no longer frozen and can be used as long as they are used prudently and subject to review by the attorney general,” said Toporek.

“The bill is of importance to nonprofits, colleges, hospitals, and charitable organizations because it would permit greater flexibility in spending endowment moneys,” said Roy Tanzman, president of the State Association.

“In our Jewish community, these endowment resources help bridge budget gaps, allowing us to fund our camps, programs for the elderly, and, among other things, our day schools,” he said.

The State Association was joined in its advocacy by hospitals, colleges, and the New Jersey Catholic Conference.

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