This article was produced in partnership with Spotlight PA and The Philadelphia Inquirer, which is a member of the ProPublica Local Reporting Network.
For over a year, lawyer Bob Heist, then-chairman of the Milton Hershey School’s board, says he sought internal financial records detailing the spending history of the $17 billion charity, which has a mission to educate low-income students for free.
He now says he is being denied records he needs as a board member charged with overseeing the Pennsylvania boarding school’s operations, and earlier this month he sued the school to obtain the documents. It’s an extremely unusual step for a sitting board member, taken against an extremely unusual institution: The Milton Hershey School is the wealthiest pre-college educational institution in the United States. It controls 80% of the Hershey Co. candy giant’s voting shares, and reaps profits from the sale of Hershey chocolate bars, Reese’s peanut butter cups and SkinnyPop-brand snacks sold in thousand of U.S. retail stores.
The dispute is the latest in a series of legal entanglements involving the nonprofit Milton Hershey School and the members of its governing board. Two previous financial controversies raised questions about whether the school’s spending was serving the needs of its roughly 2,100 students, as required by law and enforced by the state attorney general’s office.
The suit also raises anew questions about board oversight of the vast Milton Hershey fortune, donated by the candy company’s founder to help poor and at-risk children. For months, The Inquirer, Spotlight PA and ProPublica have investigated this and other issues, including whether school leaders and board members have fulfilled that mission to a degree commensurate with the charity’s vast resources. The publications will share their findings in upcoming stories.
For years, critics have argued that the school, and the endowment that funds it, could be spending hundreds of millions more than it does. Because of Milton Hershey’s restrictive deed on the endowment, the charity cannot dip into any of its principal, now worth $16 billion. (That’s roughly the size of the endowment of the University of Pennsylvania, which is not subject to those constraints.) It can spend the income earned from those holdings, but it only spends part of that each year and has amassed about $1 billion in unspent income. The school recently received court approval to use some of those funds to build and run six preschool centers CONTINUE READING: Hershey Profits Fund $17 Billion Endowment for Nonprofit School, but Board Member Says It Won’t Let Him See Financial Records — ProPublica