Potentially Problematic Trust Funding the Milton Hershey School

Milton Hershey used his chocolate fortune to found a trust to benefit children. Robert Sitkoff (professor of law, Harvard) recently commented on this potentially problematic trust in a Wall Street Journal article:

• The trust funds the Milton Hershey School, which serves 1,700 underprivileged children.
• The school’s endowment is worth $6.2 billion.
• Nearly half of the trust’s assets are invested in the Hershey Company and lacking diversification.
• Hershey is expected to bid over $16 million to purchase Cadbury, a possibly dangerous move for the undiversified trust.
• The trust attempted to diversify in 2002, but efforts were prevented by Pennsylvania Legislature.

The article concludes as follows:

There are only a handful of universities with bigger endowments than the Hershey Trust, yet the Hershey School has something like 2,000 children. Why aren’t there more Hershey Schools? Why aren’t they helping more children? Instead of a larger, more secure corpus, the Trust has a smaller, undiversified portfolio – and this has been required of it by Pennsylvania lawmakers.

 Michael Corkery, Cadbury-Hershey: Too Much Risk for the Kid’s?, WSJ, Nov. 24, 2009.