[Review] 'The Chocolate Trust: Deception, Indenture and Secrets at the $12 Billion Milton Hershey School'
June 02, 2015
Would you be concerned if you knew there was a charity that served only a couple of thousand children each year even though its asset base was the same size as the Ford Foundation's? Would you wonder what that charity, three times the size of the largest U.S. community foundation, did with the money it accumulates and doesn't spend each year? Would you wonder who benefits from it?
Bob Fernandez, a reporter for The Philadelphia Inquirer, wondered all that and more about the $12 billion Hershey School and decided to do some digging. The result is The Chocolate Trust (Camino Books, 256 pages; $24.95/paper, $9.99/ebook).
The book is important not simply for what it reveals about the trust, about those who have profited from its sometimes questionable practices over decades, and about the kids who have been neglected as a result of those practices. The Chocolate Trust also is a cautionary tale for anyone who thinks nonprofits can self-regulate or rely on local and state government authorities who too often are ethically compromised and politically constrained to keep them on the straight and narrow.
First, a little history. In 1909, Milton Hershey, who had started a chocolate company and set out to build a town for its workers, established the nonprofit Hershey Industrial School, a residential facility to serve young, fatherless, white boys. In 1918, a few years after Hershey's wife, Kitty, died – they never had children and had no heirs – Hershey transferred his land and other assets to his "orphanage," making it a very wealthy entity indeed.
Hershey stipulated that those assets were to be managed by the Hershey Trust, part of a for-profit bank, and he retained a significant measure of control over the school's operations by reserving to the bank the right to appoint its board members. In simple terms, the bank controlled the school's assets and operations, and Hershey owned the bank – the reverse of standard operating procedure in the charity world, where donated assets typically are controlled by the charity to which they have been donated.