Spring 2017

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Spring 2017 issue of Trustee

A Service for LTA Members: Ask Joe Eisner

Another service of provided by LTA. Have a question? Ask Joe by e-mail: or by calling toll- free: 1-866-720-8969. This service is free of charge to members -- including trustees and directors. (All questions are handled with appropriate discretion. The questions posted in Mr. Eisner’s columns are generalized frequently asked questions.) 'NEW: Now view Joe’s archived columns in one spot, sorted by cateogry! Please visit Resources & Links > Ask Joe Eisner


"May an association library board authorize its treasurer to invest library funds in “high quality investment grade securities"?


Depending on the source of the funds- possibly. The following should not be construed as legal advice, for which the services of counsel should be obtained:

1. General- an association library board, unlike the board of a public library, is not required to observe the investment guidelines imposed on public library boards by General Municipal Law ss10-11. However, an association library board may find it prudent consider doing so (see: Investing and Protecting Public Funds [pdf - updated 2014], particularly pp. 5-11).

The above publication includes sections about the fundamentals of investing and protecting local government funds in New York State. While "[l]ocal governments [including public library boards] have a limited number of investment options available to them" in order to maintain the safety and liquidity of cash assets, the objective of the guidelines in the above referenced guide is the same as it is for an association library board acting as a fiduciary in holding funds for investment: it
...may invest the same in securiti... provided that investment is made only in such securities as would be acquired by prudent men of discretion and intelligence in such matters who are seeking a reasonable income and preservation of their capit..." [emphasis supplied] (Estates, Powers and Trusts Law s11.2.2(a)(1)).

Additionally, "[w]ith respect to investment of funds, the requirements which would need to be followed by trustees of association libraries are those applicable to investments by trustees generally and the investments are similar to those permitted for savings banks (Banking Law s97(1-3)" (ltr, Education Department Law Division, August 25, 1964).

It would be prudent for an association library board to also seek the advice of counsel, in order to determine whether the provisions of Article 5-A of the Not-for-Profit Corporations Law s550(e)(1-6), and (f) may be applicable to investments under consideration.

2. Treasurer's duties - it would be prudent to examine the full text of any existing board adopted investment policy to determine if this or any other policy authorizes the library treasurer to make investment decisions independently of the library board. If not, even though he/she has the title of treasurer, he/she is merely the custodian of funds with no power to make investments not authorized by affirmative board action.

As can be observed from the statutes and opinions above cited, the delegation of the authority to make investments places an obligation on the designee which may assume greater importance in this time of low investment yields. Both the library treasurer and the library board should prudently question whether the existing investment policy provides the authority for funds to be invested in what might be considered a riskier vehicle than those referred to in the statutes and opinions cited. Since preservation of capital sufficient to generate a certain annual yield either to support library operations, or for whatever the board contemplates that yield should be used, but at the very least, to preserve capital, the board should serious consideration to the guidance imposed by Not-for Profit-Corporations Law s552(e)(1-2), even if counsel advises that this statute may not applicable to an association library.

The foregoing should not be construed as legal advice, for which an attorney should be consulted.

For more information about Joe Eisner's experience and background, please click on the "Ask Joe Eisner" tab under "Resources and Links" on LTA’s website.

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