If you sit on a parish finance council, you've probably approved an endowment report without ever being told which law governs it. That law is UPMIFA, and it shapes every decision your council makes about spending, investing, and protecting donor intent. It's less intimidating than it sounds. Here's what it asks of you, and how a parish endowment fund held with the Foundation handles most of it for you.
What UPMIFA Requires of Every Parish Endowment
Prudence, Spelled Out
UPMIFA is the Uniform Prudent Management of Institutional Funds Act, a model law from the Uniform Law Commission that nearly every state has adopted. It replaced a 1972 statute that gave charities almost no guidance on spending. The current standard is easy to say and harder to practice: act in good faith, with the care an ordinarily prudent person would use. Then document the thinking. That last part is where councils slip.
Arizona Calls It the MCFA
In Arizona, the act arrives as the Management of Charitable Funds Act, found in Title 10, Chapter 41 of the state statutes. Same principles, local citation. A.R.S. 10-11803 lists seven factors your council should weigh before spending from an endowment fund, including inflation, general economic conditions, and the fund's expected total return. Seven. Not one.
Where Parish Finance Councils Get Stuck
Setting a Spending Policy You Can Defend
A common annual draw sits somewhere near 4% to 5%, but the percentage matters less than the record behind it. A written endowment spending policy, reviewed each year against those seven factors, is what turns a judgment call into documented prudence. If your minutes say only “approved,” you have a gap. Write down the reasoning.
When Flexibility Matters More Than Permanence
Sometimes a parish needs access to principal: a roof in Scottsdale, a classroom building in the East Valley. A true endowment won't allow it. A quasi-endowment will, because the restriction comes from your own board rather than a donor's gift instrument. Know which one you're holding. The legal difference is real.
How the Foundation Carries the Fiduciary Load
One Pooled Portfolio, Screened for Catholic Values
When a parish endowment is held with the Foundation, we assume fiduciary responsibility for compliance with Arizona's rules. Funds are invested through pooled portfolios screened against Catholic teaching, with oversight from our finance and investment committee. We manage endowment funds for 98% of parishes in the Diocese of Phoenix, representing more than $160 million in assets. Your council isn't doing this alone.
What Your Council Still Decides
Delegation isn't abdication. Your council still sets the fund's purpose, approves the annual distribution, and reviews performance. What you hand off is the statutory machinery: investment management, recordkeeping, donor intent documentation, and the audit trail behind every decision. That's the work that quietly eats a business manager's week. Our Tempe team handles it.
Frequently Asked Questions
Q: Does UPMIFA apply to a parish, or only to large institutions?
A: It applies to any institution holding funds exclusively for charitable purposes, which includes parishes, Catholic schools, and diocesan agencies. Size doesn't exempt you.
Q: Can we spend below the original gift amount?
A: Generally yes, if the appropriation is prudent and the gift instrument doesn't forbid it. The older rule that protected “historic dollar value” no longer governs in Arizona.
Q: Who is responsible if a spending decision is questioned?
A: Responsibility is shared, and it's worth putting in writing. We act as fiduciary for the funds we hold, while your council remains responsible for its own appropriation decisions.
Talk With Our Team
UPMIFA compliance shouldn't rest on one volunteer with a spreadsheet. If your parish, school, or Catholic agency wants a clearer endowment structure and a partner who does this work every day, contact the Catholic Community Foundation or call us at 480-651-8800.