Many wealthy donors intend to leave a philanthropic legacy behind them. Unfortunately, without proper controls and ethical management, foundation money could end up spent on items that look nothing like charity.
The Hershey Trust Company in Pennsylvania is a sad illustration of a charity that has strayed from its founder's original intentions. Milton and Catherine Hershey established the Milton Hershey School as an orphanage in 1909, intending to serve needy children. But in recent years, the charity has instead spent money on items such as:
- $100,000 base compensation for nonprofit board members, with some board members collecting up to $500,000 annually from the charity;
- $12 million dollars on a luxury golf course in a transaction that appears to have bailed out board members from a bad investment;
- $5 million dollars on a clubhouse for the golf course; and
- Use of charitable property to host political fundraising events.
The Hersheys likely never intended for their philanthropic legacy to be spent on golf courses and excessive salaries. Yet a $7.5 billion dollar endowment, with Milton and Catherine Hershey no longer around to provide oversight, is a tempting target for basic human greed.
In 2016, the Pennsylvania Attorney General intervened and required several Hershey Trust board members to resign, along with requiring several governance changes. It is impossible to tell whether the IRS ever investigated abuses at the Hershey Trust, although facts known about the trust would support such an investigation, with possible tax penalties applying. It also remains to be seen whether the Attorney General's actions went far enough to protect the legacy established by Milton and Catherine Hershey, who wanted their money spent on needy children and not on padding the pockets of the Pennsylvania elite.
You can read more about the Hershey Trust Company at the following links: