Selling Chocolate unwraps the story of The Milton Hershey School, the world’s largest child welfare charity. The endowment for the school is $12 billion dollars, is held in trust and more than half of the value is the controlling interest in the publicly-traded Hershey Corporation – maker of the famous chocolate bar.
The history of the trust since its creation in 1909 includes several modification and court proceedings, all of which illustrate trust law concepts and problems in the oversight of charities. Many legal problems are encountered. Originally for white orphan boys, the school now accepts all children subject to an income test. $50 Million was taken from the trust to start the Hershey Medical Center. The trust company responsible for the administration of the trust “owns itself.” The trust is often criticized for not diversifying its investments because of its huge holding in Hershey Corporation.
Over the last fifteen years the big question looming over the trust has been “to sell, or not to sell” the chocolate company. It’s a very large petition in the portfolio for the trust – more than 50%. Any professional investment advisor would be screaming “Diversify!” but the personal and political forces at work have so far not allowed that.
This story should be about serving disadvantaged children. Instead, it’s a story about how state politics, corporate interests, out of date trust laws, and cronyism have caused hundreds of millions of dollars to be wasted and only 1800 children served annually, despite an endowment of $12 billion dollars.