When chocolate magnate and philanthropist Milton S. Hershey signed the Deed of Trust establishing his school for poor, orphaned white boys in Hershey in 1909, he was very specific in his requirements. "His original intent is still the intent of the school," MHS president Anthony Colistra explained recently on Radio Smart Talk. "It's to nurture and educate needy children into perpetuity. And that's really what this is all about. Taking care of children in need -- fiscal and social need -- and to do it in a way that it will be done in perpetuity, which puts an added burden on the school in terms of making sure we're prudent with what we do."
Today, MHS spends about $75,000 per student per year. Enrollment is expected to reach 1845 this school year. The Deed of Trust has been modified over the last century and now the school accepts boys and girls of all races in financial need. The $75,000 cost covers room, board, transportation, education, complete dental, vision and hearing care, and any other legitimate expense a student might incur.
But the mechanism by which the school is funded and operates is somewhat complex. The Hershey Trust Company manages the school's endowment which now amounts to about $7 billion. The Hershey Trust Company is the majority shareholder in The Hershey Company, America's second largest chocolate-maker. The Hershey Trust owns the Hershey Entertainment & Resorts Company. Each member of the Trust Company's board is a manager of the Milton Hershey School.
"Half of the Trust Company's assets are in Hershey Company stock and half are in equities from other companies. The Milton Hershey School is the Trust's sole beneficiary, not the company and not HERCO. So, the Deed of Trust says the principal cannot be spent, only earnings and dividends from other companies," Dr. Colistra noted. What that means is that in a period of economic recession, low earnings put a squeeze on the amount of interest the endowment earns. It has forced the Trust Company board to become more frugal. For instance, an ambitious plan to increase enrollment from the present 1845 to 2000 students by 2013 has been postponed.
"I've taken a stance of slow and steady," Dr. Colistra said on Radio Smart Talk. "We're not going to grow by 60 or 100 kids a year but maybe one or two houses a year which would be 12-24 kids a year. That is much more manageable for us than the helter skelter we went through in building so much. At one period of time in our history, in a very short period of time, we spent a lot of money."
Spending a lot of money on the Trust Company's board of directors has raised the ire of some alumni who have formed a non-profit, Protect the Hersheys' Children (PHC), to advocate for reform. Ric Fouad, an MHS alum and member of PHC, has petitioned the IRS, members of Congress and the state secretary of Banking to investigate what he calls "excessive board compensation that appears to contravene not-for-profit and banking laws." Fouad claims the board's compensation and other "systemic problems" burden the charity, hurt needy children and are "dissipating funds intended for their care." And the recent revelation of a $3 million board settlement with the families of five students who were sexually abused by the son of a relief house parent raises more concern. WITF-FM Morning Edition anchor Tim Lambert will share his interview with Fouad on our program.
Connie McNamara, vice president of communications at MHS, will be our guest and take your phone calls and emails. MHS senior, Sarah Donnelly of Fairfield, PA, Phil Grimm, director of home life for the middle division, and Deanna Slamans, an MHS alumna and a full-time house parent, will take us behind-the-scenes for a look at real life on campus today.
You can join the conversation by calling 1-800-729-7532 or email us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
