The Milton Hershey School The Richest Orphans in by fse70183


									                       The Milton Hershey School                                                                        April 2003

                     The Richest Orphans in America
by Martin Morse Wooster                                        dent George W. Bush, recently successfully completed a
                                                               five-year $209 million capital campaign. That’s a larger
“Mr. Hershey can not estimate the good that will result        fund-raising drive than any other prep school. Milton
from his tremendous gift. Neither he nor anyone else           Hershey School, by contrast, is in the middle of a five-
can have more than a faint conception of the influence         year, $228 million building campaign—and it doesn’t have
that this school will exert on the lives of its inmates, on    to ask its alumni for a penny. The Hershey School is
the communities in which they will become a part, on           funding the entire project out of its $570 million rainy day
the State, the nation, and posterity.”                         fund.
                                                                  Here’s another way to show the wealth of the Hershey
        editorial in Troy (N.Y.) Times (1923)                  School. Look at how much they spend per student.
                                                               Phillips Andover spends about $49,000 per student. The
   Last year, Dauphin County Orphans Court in Harris-          Hershey School, in the 2000-01 school year, spent $111
burg, Pa. was the setting for an exceptionally heated battle   million for food, clothing, and education for its 1,150
over donor intent. At stake was this question: Was the         students. That amounts to $96,000 per student—nearly
Hershey Trust, acting as agent for the Milton Hershey          ten times as much as the average public school spends.
School, fulfilling the wishes of chocolate magnate Milton         So the story of the Milton Hershey School poses two
S. Hershey in selling the school’s controlling interest in     questions. First, what happens when a donor sets up a
Hershey Foods for up to $12 billion?                           perpetual trust for a single purpose—and the trust has too
   Ultimately, the court did not have to address this issue,   much money? Second, what does the Milton Hershey
as the Hershey School’s board voted 10-7 against the           School story say about the success or failure of orphan-
sale. The seven board members who supported the sale,          ages in America?
as well as Hershey School president William S. Lepley,            To understand how the Milton Hershey School arrived
resigned.                                                      at its present predicament, we need to turn the clock back
   But the controversy showed that the richest prep school     a century and study what the school’s founder tried to do.
in America was not some prestigious New England
establishment, but was an orphanage. How well-en-              The Donor
dowed is the Hershey School? Harrisburg Patriot-                  Milton S. Hershey (1857-1945) was one of America’s
News reporter Ford Turner provides some useful com-            greatest entrepreneurs. Born in Hockenville, Pennsylva-
parisons. In 2002, Phillips Andover Academy, whose             nia, in the heart of Pennsylvania Dutch farm country,
alumni include President George H.W. Bush and Presi-           Hershey was the son of a mother who did not want her
                                                               children to have an education and a father who wanted his
                                                               children to go to school. Because the Hershey family was
                                                               poor, they were constantly moving to flee creditors. As
                           Visiting Fellow Martin              a result, Milton Hershey went to seven schools in eight
                           Morse Wooster is the au-            years, and emerged with the equivalent of a fourth-grade
                           thor of The Great Philan-           education.
                           thropists and the Problem              Young Milton started working when he was 14 and
                                                               never stopped. He first worked for a confectioner in
                           of Donor Intent
                                                               Lancaster, Pennsylvania, and then went into the candy
                                                               business with his father, starting a taffy company, which
                                                                                                      continued on page 2

                                                                But what should the place be called? In 1906, Hershey
    Hershey                                                     held a nationwide contest; the entries included Hustletown,
   (continued from page 1)                                      Ulikit, Etabit, Qualitytells, Chocolate City, and St. Milton.
   was undercapitalized and ultimately failed. Hershey then The winning entry was Hersheykoko, but the post office
   started a cough drop company, which also failed.             rejected the name as being too commercial. But Hershey
       In 1882, Hershey tried a third time, this time with was acceptable to the Post Office, and so the town
   caramels. Previous caramel makers made their products became Hershey.
   chewy by using paraffin. But Hershey was the first to            Milton Hershey made sure that Hershey, Pa. was
   figure out that milk could perform the same function, at far created according to his specifications. He designed all
   less cost. He created Lancaster Caramel, which was the houses—and tore down the ones that seemed too
                                                                                     much like slums. Hershey workers
                                                                                     could relax in Hershey Park, and ride
One time Hershey saw a clubfooted boy walking carousels and watch vaudeville acts
through town, and quietly paid for the cost of the courtesy of the company. If they
                                                                                     needed to travel outside of Hershey,
operations needed to fix the youth’s foot.                                           the company provided a 30-mile inter-
                                                                                     urban railway. If they wanted a meet-
   quite successful.                                            ing space for their clubs, the company provided a commu-
     By 1895, Lancaster Caramel had three plants, and was nity center. (The community center also showed mov-
   doing a million dollars of business a year. Hershey was a ies—purged, News-Week reported in 1935, of “dirty jokes
   success, and his wealth enabled him to attract—and and sensual dances.”)
   marry—Catherine Sweeney in 1898.                                   In 1908, Hershey incorporated. One year later,
      Hershey could have stayed a caramel maker all his life, Hershey decided to donate the majority of his stock to
   but changed his mind during a visit to the Columbian create an orphanage, or what he called the Hershey
   Exposition in 1893, where he saw some German choco- Industrial School.
   late-making equipment and decided that being a chocolate         Milton S. Hershey had always been charitable, and
   manufacturer was his ultimate ambition. In 1900, Hershey had never sought any publicity for his gifts. Hershey
   sold Lancaster Caramel for $1 million and used the biographer Roy Bongartz gives some examples. One time
   proceeds to fund an around-the-world trip. The Hersheys Hershey saw a clubfooted boy walking through town, and
   made it as far as Mexico City when Milton Hershey quietly paid for the cost of the operations needed to fix the
   announced that he was bored, and the couple turned youth’s foot. In another case, a boy was severely beaten
   around and headed for home.                                  up by bullies. Again, Hershey quietly paid all the medical
      Hershey first made chocolates in a wing of the Lancaster
   Caramel plant, and, as with the caramels, his great secret
   was that he figured out how to make milk chocolate in              For more information contact:
   large quantities. Before Hershey began making choco-
   lates, chocolate was an expensive treat. Hershey’s
   success ensured that everyone could enjoy a nickel bar of          Milton Hershey School Alumni Association
   Hershey’s Chocolate (introduced in 1900) or Hershey’s              Post Office Box 133
   Chocolate with Almonds (introduced in 1908) for lunch.             Hershey, Pennsylvania 17033-0133
       As the business grew, Hershey looked around for a
   place to build a factory. He eventually found some land            Phone Number 717-520-2045
   in Derry Township, Pa., about a mile from where Hershey            Out of Town 1-800-292-4MHS
   grew up. Hershey knew the area had several advantages.             Fax Number is 717-520-2044
   There were many Pennsylvania Dutch farmers nearby,
   who could either work hard in his factory or supply the
   plant with plenty of milk. And the factory was conve-
   niently located for shipments to East Coast distributors.          email:
       Hershey began building his factory in March 1903.
bills.                                                    ture, gardening, such mechanical trades and handi-
      But the gift to the Hershey Industrial School far   crafts as the Managers may determine, and such
surpassed anything else Hershey gave away. Hershey’s      natural and physical sciences and practical math-
best expression of his intent is provided in a 1923 article
                                                          ematics as in the opinion of the Managers it may be
by James C. Young in the New York Times. “I am 66         important for them to acquire, and such other learn-
years old and do not need much money,” Hershey said,      ing and science as the tastes, capacities, and adapt-
My business has been far more successful than I ever      ability of the several scholars may merit or warrant, to
expected it to be. If I should drop out, what should become
                                                          fit themselves for the trades they are to learn, and a
of the business, the capital and the earnings?...Well, I  useful occupation in life...Each and every scholar
have no heirs, so I have decided to make the orphan boys  shall be required to learn, and be thoroughly in-
of the United States my heirs.
     “The orphan boy has a harder
time than anybody else, you know.          “The orphan boy has a harder time than anybody
There are always relatives or out-
siders to take an orphan girl. Girls
                                           else, you know. There are always relatives or
are useful in the home, and people         outsiders to take an orphan girl. Girls are useful
are glad to get them. But boys are
likely to be looked upon as a nui-         in the home, and people are glad to get them. But
sance. The more spirit they have,          boys are likely to be looked upon as a nuisance.”
the bigger the nuisance.”
  “Our school will give a boy in its
care a thorough common school education, supplemented structed in some occupation or mechanical trade, so
by instruction in the useful crafts,” Hershey continued. that when he leaves the School on the completion of
He then enumerated some of the crafts—carpentry, the period for which he is to remain, he may be able to
blacksmithing, farming, “the rudiments of electrical work.” support himself.”
   “We do not intend to turn out finished artisans, but to    Milton Hershey was a very active donor. He routinely
provide a foundation on which they may build,” Hershey visited each of the boys in his care; and once a year, all the
said. “And when they leave us at 18 we will then give boys were sent to Hershey’s mansion for a special
them $100 each to begin life. That is more than I had.” breakfast of hot cocoa and toast. Henry Keener, who, as
    Young then asked if Hershey’s wealth could be used a “house parent,” supervised the boys, told author Joel
to provide “an academic training for most of the orphan Glenn Brenner that “You didn’t know when Mr. Hershey
boys in the United States.”                                 was going to drop by unannounced. And he was the most
    “We do not intend to turn out a race of professors,” meticulous fellow with himself. With his clothing, his
Hershey replied. “The thing that a poor boy needs is mannerisms, everything. I never saw him in anything but
knowledge of a trade, a way to make his living. We will a full-dress business suit, usually a dark suit. Never saw
provide him with the groundwork. Of what use is Latin him in light clothing.”
when a fellow has to hoe a patch or run a lathe? But we         Most of the boys turned out pretty well, and became
expect to develop a plan under which boys of special productive citizens. Bill Dearden, for example, arrived at
promise in the academic branches may go to college.”        the Hershey School in 1935, as a 13-year old from the
   Hershey further expressed his work-oriented philoso- slums of Philadelphia. His mother had just died, and his
phy in his Deed of Trust, executed in 1909. Clause 17 of father could not afford to feed his family.
the deed states that “All orphans admitted to the School       Four decades later, Dearden recalled that his first day
shall be fed with plain, wholesome food, plainly, at Hershey, he was driven through Hershey’s 10,000
neatly, and comfortably clothed, without distinctive acres and was given his first pair of long pants He then
dress, and fitly lodged. Due regard shall be paid to was given the biggest meal he had ever had. “Creamed
their health; their physical training shall be attended rice was the vegetable, and there was apple pie for
to, and they shall have suitable and proper exercise dessert,” Dearden told the Philadelphia Inquirer.
and recreation. They shall be instructed in the several “Where I came from, creamed rice was a dessert. It was
branches of a sound education, agriculture, horticul-                                             continued on page 4

                                                              a nonprofit has been what investors call a “poison pill.”
     Hershey                                                  Outside investors never attempted to seize control of
   (continued from page 3)                                    Hershey Chocolate, because to do so they would need to
   like getting two desserts in one meal!”                    control the Trust’s shares—and the Trust was unwilling to
        After he was graduated from the Hershey School, sell. Thus this interlocking directorate has ensured Hershey
   Dearden was graduated from Albright College. In 1976, Chocolate’s independence.
   he became the only Hershey School alumnus to become           Catherine Hershey died in 1915, and in 1918, Milton
   CEO of Hershey Foods. “I don’t know where I’d be today Hershey transferred control of between two-thirds and
   if it wasn’t for Mr. Hershey,”                             three-quarters of Hershey Chocolate stock to the Hershey
                                                                                 Trust. Hershey managed to keep this
                                                                                 transaction secret from the press for
He then was given the biggest meal he had ever had. five years.
“Creamed rice was the vegetable, and there was world,” Hershey told Fortune in 1934,To have advertised his gift “to the

apple pie for dessert. Where I came from, creamed “would have seemed like...telling the
rice was a dessert. It was like getting two desserts.” people toand morecompetitors...would
                                                                                                     chocolate to aid the

                                                                                 have said I was taking advantage of
   The Hershey Trust                                            But when James C. Young broke the story of Hershey’s
      Hershey set up the Hershey Trust to manage the gift in November 1923, he told New York Times’ readers
   school’s assets, including the shares of Hershey Choco- that, unlike other great philanthropists, Milton C. Hershey’s
   late, and declared that both Hershey Trust and the gift (which he estimated at $60 million) came from a
   Hershey Industrial School should be perpetuities. The fortune “unlike those given away with free hands in the
   boards of the trust, the school, and the company over- past few years. It came neither from oil, steel, or finance,
   lapped substantially, and the goals of the three organiza- but from the modest chocolate bar.” (“Think of an orphan
   tions intertwined; the factory’s profits were used by the boy,” Young concluded, “having as his guardian a man
   trust to fund the school, and the school would create who will give him as much chocolate as he can eat!”)
   productive young men—some of whom would end up                The press, always on the lookout for new philanthro-
   working in the factory.                                    pists, saluted Hershey’s generosity. “When a man spends
      The best explanation                                                                            his fortune in that
   of how the three over-                                                                             wholly unselfish
   lapping Hershey orga-                                                                              fashion in his own
   nizations were supposed                                                                            lifetime,”      the
   to interact is provided                                                                            Philadelphia
   by Wm. A. McGarry in                                                                               Public Ledger edi-
   a 1940 article in                                                                                  torialized, “the
   Nation’s Business.                                                                                 world applauds,
   “The plant is now owned                                                                            and it is lastingly
   in trust by the home,”                                                                             imprest (sic) by the
   McGarry explained.                                                                                 example.”
   “The business supports                                                                                  The New York
   the boys and the boys                                                                              American con-
   supply labor and execu-                                                                            trasted Hershey’s
   tives for the business                                                                             gift with a more in-
   when they grow up.”                                                                                ept donor who left
      One consequence of                                                                              $1,000 to his wife
   this relationship is that                                                                          and $36,500 to be
   being largely owned by                      The boys did the milking by hand
spent on prayers for his “poor, miserable soul.” The           noted that the wealth created by Hershey Chocolate
difference between the prayer-monger and Hershey, the          “must always be used to keep up an orphan asylum and for
newspaper said, was “all the difference between selfish        no other purpose.” He commended the policies of the
barbarism and enlightened civilization.”                       great philanthropist Julius Rosenwald, who willed that the
   But not everyone applauded Hershey’s gift. Social           Rosenwald Fund spend itself out within 20 years of the
workers were outraged.                  Didn’t Hershey         donor’s death.
consult...professionals? Didn’t Hershey know that or-              “There are some indications,” the Fortune writer
phanages were...Victorian?                                     concluded, that Milton Hershey “is now considering a
   Neva R. Deardorff, for example, visited the Hershey         modification of the perpetuity provision.” This did not
Industrial School in 1924 when she surved prominent            happen. In fact, since 1945, there have been only two
American orphanages, including Girard College in Phila-        major modifications to the Deed of Trust.
delphia and the the Fraternal Order of Moose’s Mooseheart
orphanage. Writing in The Survey, the trade journal for        Straying from the Donor’s Intent
social workers, Deardorff explained that Milton Hershey              The first of these took place in 1963, when the
“has not been keenly aware of progressive or even              Hershey Trust, under pressure from Hershey Chocolate
contemporary thought in the field he has entered; but          CEO Samuel F. Hinkle, convinced the Dauphin County
rather follows all too faithfully the model of his great-      Orphans Court to transfer $50 million—or 20 percent—of
grandfather’s time.”                                           the trust’s assets to Pennsylvania State University so that
   Deardorff saw a school where many telling pieces of         the university could create the Milton S. Hershey Medical
evidence—home-canned peaches, double-decker beds,              Center. The center, which is located in Hershey, serves
low salaries for teachers—”bespeak an ambition to save         as the Penn State medical school, even though the center
on every corner.” She was also critical of the interlocking    is several hundred miles away from Penn State’s main
directorate that ran the school and the company. “One          campus in State College, Pa.
cannot quite decide whether the school is a vestibule or a        Because this medical center is located in Hershey, the
cupola to the business,” she wrote.                            diversion of funds is justifiable. It’s clear that Hershey
  But the Hershey Industrial School managers, Deardorff        wanted his wealth to aid the community, which could
wrote, could make the school “one of the great experi-         certainly use a good hospital. (Had the hospital been
mental stations in relating life and work to education.”       located in State College, the diversion would have been far
   Similar criticisms were made by an anonymous For-           more questionable.)
tune writer in 1934. Like most Fortune articles of the              The Hershey School began to admit blacks in 1968
1930s, the piece was well-written, extremely thorough,         and girls in 1976. As courts have repeatedly struck down
and told from a left-wing perspective. Fortune said that       restrictions by race and gender in other educational
nearly all of the boys in the school had their mothers still   institutions, it’s clear that had the Hershey School fought
living, and that for the $1,000 they spent on educating a      to preserve these restrictions, they would have been sued
child, Hershey funds could educate three children at           and lost.
home. “For normal children,” Fortune said, “it is pretty          The Milton Hershey School now admits any qualified
well agreed that a normal home environment is better than      applicant from a low-income, single-parent household, as
the best possible institutional settings.”                     well as “social orphans” from two-parent households that
      Moreover, Fortune charged, the Hershey School            can’t afford to take care of children. Today, only 10
refused to admit boys who weren’t smart enough to keep         percent of Milton Hershey students are true orphans who
up with class work, were “unfit companions for others,”        have one or more dead parents.
or who were bedwetters. But the writer said that “in the             But the Hershey School is straying from Milton
light of modern theories about the care of children,” the      Hershey’s intentions in more important ways. The school
Hershey School was “taking out of the home precisely the       remains an orphanage, albeit an exceptionally well-en-
children who should be allowed to remain there, and it is      dowed one. But it no longer emphasizes Milton Hershey’s
excluding just the children that an institution might really   idea of giving poor children a practical education.
help.”                                                             Part of the drift comes from the corporate side of the
   Fortune was on sounder ground when it attacked the          Hershey philanthropies. Hershey Chocolate became
Hershey philanthropies for being perpetuities. The author                                              continued on page 6

                                                          iors and seniors from leaving campus more than one night
Hershey                                                   a week.
(continued from page 5)                                       More dramatic changes began to take place in 1989,
                                                          when the Milton Hershey School launched a program
Hershey Foods in 1968, and gradually expanded into pasta
                                                          called the “21st Century Alternative” which eliminated
and other food products. As it changed, the company
                                                          many of the vocational programs Milton Hershey cher-
became far less paternal. The community center was
                                                          ished. The print shop became a “communications center,”
reclaimed by the company and turned into corporate
                                                          the auto shop became a “energy, power, and transporta-
offices. Hersheypark became fenced in and was trans-
                                                          tion center,” and the carpentry shop became a “construc-
formed into a more conventional amusement park. (The
                                                          tion center.” Even physical education classes were re-
park is owned by Hershey Resorts and Entertainment, a
                                                          named “wellness classes.” The morning chores at the
wholly-owned subsidiary of the Hershey Trust, so all its
                                                          barns also ceased, as Hershey staff feared that farm work
profits flow to the Hershey School.)
                                                          would be too much for the inner-city children who were
    As for the Hershey School, it changed as Hershey
                                                          now a majority of the students. Long time Milton Hershey
Foods’ stock prospered. For nearly 30 years, Hershey
                                                          School employees—some with over 20 years tenure at the
Foods averaged annual returns of 17 percent. The Hershey
                                                          school—were dismissed.
School was rolling in cash. The school’s managers chose
                                                            The Milton S. Hershey Alumni Association, a vigorous
to spend much of this wealth on a pharaonic building
                                                          supporter of Milton Hershey’s donor intent, began to
                                                          complain to the Pennsylvania Attorney General’s office
   “The orphanage has accumulated so much money that
                                                          that Hershey’s wishes were being violated. They further
it doesn’t know how to spend it,” Roy Bongartz observed
                                                          complained as new Hershey School president William
in 1973. He noted that the school had spent millions on
                                                          Lepley (who had been Iowa’s state school superinten-
Founder’s Hall, a lavish tribute to Milton Hershey “that
                                                          dent) led an effort which cut back the number of acres the
looks like a recently added addition to the Strip in Las
                                                          Hershey School owned by two-thirds and further slashed
Vegas.” Bongartz quoted an unnamed Hershey School
                                                          the vocational programs. Alumni also complained that the
executive as saying that the fancy buildings were neces-
                                                          school was less inclined to bring in poor kids in trouble and
sary because “if a boy is presented with a bright, clean
                                                          more likely to bring in middle-class children who did not
wall, he won’t make a mark on it.”
                                                          need the extra help Hershey provides. Under Lepley’s
    On assignment for the Philadelphia Inquirer Maga-
                                                          guidance, the Hershey School had not completely trans-
zine in 1982, Bill Ecenbarger noted that the Hershey
                                                                                                formed itself into a
School was offer-
                                                                                                conventional prep
ing even more perks,
                                                                                                school, but it was well
such as free braces
                                                                                                on the way to cater-
for those who
                                                                                                ing to the “race of
needed them and
                                                                                                professors” the do-
meals served in the
                                                                                                nor despised.
Camelot Room, “a
                                                                                                   The courts did not
dining hall with a
                                                                                                try to block this drift
King Arthur motif
                                                                                                towards academia
that could be a $100-
                                                                                                since the alumni as-
a-meal restaurant.”
                                                                                                sociation could not
Students were still
                                                                                                show a violation of
subject to some dis-
                                                                                                donor intent. How-
ciplinary restric-
                                                                                                ever, in 1999 Lepley
tions, including man-
                                                                                                tried a major diver-
datory chores in-
                                                                                                sion. He asked the
cluding cow-milk-
                                                                                                Dauphin County Or-
ing at 5:30 A.M. and
                                                                                                phans Court for per-
a rule barring jun-                          Senior Hall opened in 1934                         mission to divert $25

million to start an education think-tank which would have      preferred) of Hershey Foods. However, the school’s
been called the Catherine Hershey Institute for Learning       board made a major mistake when it decided not to explain
and Development. Lepley promised that this think tank,         why it supported the sale. Hershey Trust president
which was projected to have an annual budget of $25            Vowler initially made a few statements about how the
million by 2004, would never have a budget higher than         board thought it was necessary to diversify the school’s
half the Hershey School budget.                                endowment. But then he—and all other supporters of the
   In creating this think tank, Hershey Trust CEO Robert       sale—refused to talk to the press.
Vowler told the Wall Street Journal, the Hershey board              As a result, when the world’s financial journalists
was worried that the school would suffer the fate of the       descended on Hershey, they found numerous foes of the
Buck Trust. In that case, oil heiress Beryl Buck left a $300   sale eager to talk to them, including members of the alumni
million estate to be used to care for poor people in Marin     association, Hershey Foods employees fearing a loss of
County, California. Her administrators tried to divert the     jobs, and Attorney General Fisher, who was the Republi-
fortune to serve the entire Bay Area, but after a titanic      can candidate for governor of Pennsylvania. (He lost to
mid-1980s legal battle (dubbed “the Super Bowl of pro-         Democrat Ed Rendell.) In addition, five former members
bate” by legal commentators) the courts ordered the            of the Hershey School board and three former Hershey
creation of several national nonprofits (an institute on       Foods CEOs announced their opposition to the sale.
aging, an anti-alcoholism organization) even though there        But no one from the board explained what the Hershey
was no evidence that Beryl Buck was interested in these        School would do with $12 billion that they were not already
causes. But because these nonprofits are based in Marin        doing with $5 billion. Nor did anyone explain why, if
County, the courts declared that their creation fulfilled      diversification of the school’s endowment was the key to
Beryl Buck’s wishes.                                           the sale, it would be better for the school to accept a
     Vowler explained that the Hershey Trust and the           lucrative offer by the William Wrigley chewing gum
Hershey School feared a similar court-ordered diversion,       company to own 36 percent of “Wrigley Hershey” com-
so they attempted to divert the money themselves. “I’m         mon rather than what they already owned.
painfully aware of the Buck Trust case,” Vowler said.              In September 2002, Senior Judge Morgan put a tem-
“That one’s a little scary.”                                   porary block on the sale to allow the court further time to
    The Alumni Association and Pennsylvania Attorney           investigate. Two weeks later, the school’s board, after an
General Mike Fisher protested the plans for the institute.     eleven-hour meeting in Valley Forge, Pa., voted 10-7 to
In December 1999, Orphans Court Senior Judge Warren            stop the sale. William Lepley, who announced that he was
G. Morgan agreed, ruling that “the proposed Institute does     retiring in June 2003, suddenly decided to retire nine
not approximate the Hersheys’ express intention for the        months early. Ten members of the Hershey School board,
Milton Hershey School and would do violence to it.” The        including the seven who voted for the sale, resigned, and
diversion plan was dead.                                       the board was cut from seventeen to 10 members. To
    The standoff between the Hershey Alumni Associa-           temporarily replace Lepley as school president, the school
tion and the Hershey School continued. In 1999, the            hired John O’Brien, a financial consultant who was an
alumni association issued a report stating numerous viola-     alumnus from the class of 1961.
tions of Hershey’s wishes. The school responded by
hiring former U.S. Attorney General Dick Thornburgh to         What Would Milton Do?
investigate. Thornburgh found that the school had done            Even though the controversy is temporarily over, the
nothing illegal, but he did not address the issue of donor     Milton Hershey School still has a major problem. What is
intent.                                                        the best way to fulfill Milton Hershey’s donor intent? If
   In July 2002, Attorney General Fisher announced that        the school continues as it is has in the past, it will serve
the interlocking directorate between the Hershey Trust,        1,500 poor children a year and give them lavish clothes,
Hershey School, and Hershey Foods was ending. From             fancy equipment, and tuition, room, and board at the
now on, no one can be a director of more than one              university of their choice. But such a scheme does nothing
organization.                                                  to help the several hundred thousand children trapped in
    Shortly after General Fisher’s decision, the Hershey       foster-care programs or in hellish homes.
School announced that it was looking for a buyer for its            Perhaps the most reasonable way to use the surplus
shares (42 percent of the common stock, 76 percent of the                                               continued on page 8

                                                               lature to authorize the building of three “residential acad-
Hershey                                                        emies” that were designed to be all-day boarding schools
(continued from page 7)                                        for troubled 9-18 year olds. Other orphanages are being
wealth of the Milton Hershey School is for the courts to       built by nonprofits, some Christian. S.O.S. Villages USA
allow the school to set up satellite orphanages across the     built three of them in the past five years. Other orphan-
US and perhaps overseas. These orphanages should be            ages have recently appeared in San Diego, Estes Park,
along the lines of Hershey’s Deed of Trust—simple              Colorado, and New Jersey.
places, where children could learn useful trades. There            Writing in Insight, Heidi Goldsmith, director of the
will always be a need for competent electricians and           Center for Residential Education, says that alternatives to
plumbers, and Hershey alumni can provide them. It’s            orphanages, such as “returning abused and neglected
quite possible that Senior Judge Morgan or his successor       children to their drug-abusing biological parents,” are not
would approve this plan, as long as the diverted funds are     necessarily the best solution for troubled children. “What
used for poverty-fighting, and not for consultants or          looks like a family isn’t necessarily what children need,”
studies.                                                       Goldsmith writes. “Children need a living setting which
     Hershey Alumni Association president Ric Fouad            behaves like a family, providing them consistent love from
concurs with such a vision. The Hershey School, he told        caring adults, stability and satisfaction of their physiologi-
CNBC’s “Business Center” show in September, is “the            cal needs. They need living environments which provide
single-largest resource on Earth for taking care of depen-     structure, values, a place they feel they belong and matter
dent and at-risk children, and it’s still being grossly        and where dreams are encouraged.”
underutilized and misused....The money they have now is           Should orphanages be the first place troubled children
plenty to utilize the resources of Hershey to add more         are sent? Perhaps not. But given the failure of foster care
children and to serve them well.”                              and social work, America—and, perhaps, the world—
    Moreover, in ed 1990s, orphanages have become              could certainly use more orphanages. An enlightened
more common i America’s foster-care has suffered
                v as                                           Milton Hershey School board could use its vast wealth to
      w   yR
from anlincreased number of children in the system and a       ensure that orphanages become more common. Such a
steadily declining number of parents. Given the number of      bold move would be the best way to adapt Milton Hershey’s
                                                               ideas to a new century.
bad parents out there—many drug addicted—it’s clear
that a troubled family (particularly a single-parent house-
hold) is not necessarily the best place to raise a child.
  In 1998, for example, Minnesota Republican Governor
Arne Carlson convinced the Democratic-controlled legis-

                 Terrence Scanlon, Publisher                                       Jill K. Lacey, Editor
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