The Surplus That Never Stops Growing Fortune Called It "Embarrassingly Large" in 1934. In 1998, Pennsylvania Passed a Law That Could Have Unlocked Billions for Poor Children. The Board Voted Not to Use It. Today the Surplus Exceeds $1 Billion. This Is the 91-Year Timeline. THE CHOCOLATE MACHINE — Post 2

The Surplus That Never Stops Growing

Fortune Called It "Embarrassingly Large" in 1934. In 1998, Pennsylvania Passed a Law That Could Have Unlocked Billions for Poor Children. The Board Voted Not to Use It. Today the Surplus Exceeds $1 Billion. This Is the 91-Year Timeline.

THE CHOCOLATE MACHINE — Post 2 | February 2026

THE CHOCOLATE MACHINE: One Man's Gift. One Deed. One Betrayed Mandate.
"In trust for a permanent institution for the residence and accommodation of poor children."
— Milton S. Hershey, Deed of Trust, November 15, 1909

Post 1: The Gift — What Milton Hershey actually said. What the trust actually heard.
Post 2: The Surplus That Never Stops Growing — 91 years of "embarrassingly large" accumulation ← YOU ARE HERE
Post 3: The Board That Serves Itself — Same people. Two boards. $112,000-$130,000 each. No retail banking.
Post 4: The Sale That Never Happened — $12.5 billion, 10,000 protesters, and the trustees who got fired for trying
Post 5: The Billion Sitting Idle — $1 billion in unspent income. The math the trust has never had to explain.
Post 6: The Children Who Didn't Get In — The waitlist. The admissions criteria. The gap between "poor children" and who actually gets served.
Post 7: The Maneuver — The Catherine Hershey Schools expansion: genuine mission or sophisticated optics?
Post 8: The 116-Year Question — What it would take to actually enforce the deed. And why it probably won't happen.

In 1934 — twenty-five years after Milton Hershey signed the deed, sixteen years after he gave away his entire fortune — Fortune magazine noted the "embarrassingly large surplus piling up in the school's coffers." The school marked its 25th anniversary that year by dedicating a new junior-senior high school building on Pat's Hill above the town of Hershey. It was a state-of-the-art facility. The surplus was embarrassing. And then the decades passed. In 1998, Pennsylvania lawmakers passed a statute that could have changed everything: a law allowing charitable trusts to spend up to 7% of total assets annually — not just traditional income. At that rate, the Hershey Trust could have directed hundreds of millions more per year to poor children without any court approval, by a simple board vote. A year later, in 1999, the school appeared poised to use it. And then it didn't. The enrollment in 1999 was roughly the same as it had been in the 1950s. Between 1999 and 2019, enrollment doubled — from about 1,050 to about 2,000. Over the same period, the endowment grew nearly fourfold. By 2024: $23-24 billion in assets. $1 billion in unspent accumulated income. 2,100 students. The surplus that Fortune called embarrassing in 1934 has been growing for 91 consecutive years. This post documents exactly how — decade by decade — while a law that could have redirected billions to children sat unused.

The 91-Year Timeline: Surplus vs. Enrollment

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1910

The school opens. Four students. Two sets of brothers. They live in the Homestead — Milton Hershey's birthplace. Classes in the same building. The surplus: zero. The mission: just beginning.

1918

The great gift. Hershey donates his entire fortune — $60 million in Hershey Chocolate Company stock — to the trust. Quietly, without announcement. The school's financial foundation transforms overnight. Enrollment: still in the hundreds.

1920s

First surplus noticed. Enrollment surpasses 100 students. New cottage homes built. New elementary school constructed in 1927 — reportedly the first in the nation with an indoor swimming pool. The chocolate company begins generating compounding returns. The gap between income and expenditure begins to open.

1934

Fortune magazine's verdict. On the school's 25th anniversary, a new junior-senior high school building is dedicated. Fortune magazine notes the "embarrassingly large surplus piling up in the school's coffers." This is the first documented external observation of the gap. It will not be the last. Milton Hershey is still alive. He is 77 years old.

1945

Hershey dies. October 13, 1945. Milton Hershey dies at age 88 in the hospital he built in the town he built. His entire fortune has been in the trust for 27 years. His last wish, recorded in interviews: that the school serve as many poor children as possible. The trust is now governed entirely by the board he created — with no founder to question their decisions.

1950s

Enrollment stagnates. The school celebrates its 50th anniversary in 1959 with an evaluation committee of national experts. Their findings: significant infrastructure upgrades needed. The surplus continues accumulating. Enrollment in the 1950s: roughly the same level it would still be in 1999 — forty years later.

1960s

"A Decade of Progress." The committee's 1960 report drives renovation of over 100 student homes. A new middle school is built. The school remains whites-only until the late 1960s, when — following a Supreme Court ruling on Girard College — the first non-white student is admitted. The deed's geographic priority (Dauphin, Lancaster, Lebanon counties first) and racial restrictions both narrow the eligible beneficiary class for six decades.

1976-77

The deed expands — finally. The 1976 deed restatement expands "orphan" to include "social orphans" — children with single or divorced parents. The first girls arrive in March 1977. The eligible beneficiary class, narrowed for 67 years by race and gender restrictions, finally opens. The surplus: still growing.

1998

The law that could have changed everything. Pennsylvania passes a statute allowing charitable trusts to spend up to 7% of total assets annually — far beyond traditional income. No court approval required. Simple board vote. At 7% of the trust's then-assets, this would have unlocked hundreds of millions more per year for the school's mission. The board does not use it.

1999

The moment that didn't happen. ProPublica documents: "In 1999, the school appeared poised to take advantage of the new law." Enrollment in 1999: roughly the same as the 1950s. The board votes. They do not adopt the broader spending definition. The surplus continues. The children who would have been served by the additional spending are not served.

2000s

Enrollment begins to grow — slowly. In 2002, the school has about 1,500 students. The attempted sale of the Hershey Company to Wrigley (Post 4) triggers 10,000 protesters and gets blocked by the Pennsylvania AG. The trustees who tried to sell are eventually removed. Enrollment growth: real but modest relative to asset growth.

1999-2019

The twenty-year comparison that defines the problem. Enrollment doubles: ~1,050 → ~2,000 students. Over the same period: Endowment grows nearly fourfold. The school is growing. The surplus is growing faster. The gap between what the deed demands and what the trust delivers is widening — even as enrollment improves.

2021

ProPublica investigates. "America's Richest School Serves Low-Income Kids. But Much of Its Hershey-Funded Fortune Isn't Being Spent." The investigation confirms: $17 billion in assets. 2,100 students. 1.5% spending rate. $1 billion in unspent accumulated income. MIT professor John Core: "ludicrous." Georgetown law professor Brian Galle: "indefensibly low." The surplus has been growing for 87 years at the time of publication. Former board chair Bob Heist sues for access to financial records he has been denied for over a year.

2024

Today. $23-24 billion in assets. 2,100-2,200 students. ~$370 million annual expenditure. ~$1 billion in unspent accumulated income. Spending rate: ~1.5%. The surplus that Fortune called embarrassing in 1934 is now the largest unspent charitable accumulation in the history of pre-college education. The deed says: as many as income permits. Income permits more than 2,100.

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The 1998 Law: The Door That Opened and Stayed Open

The most important moment in this timeline is not 1934 or 1945 or 1999. It is 1998 — and what the board chose not to do with what that year made possible.

Before 1998, the original deed's income constraint was genuinely limiting. The deed specified that only investment income — dividends, interest, rents — could fund the school. Not principal. Not capital gains. Just income. In the early decades of the trust, when the endowment was modest and investment income was the primary generator of returns, this was a real constraint.

In 1998, Pennsylvania lawmakers passed a statute that dissolved that constraint. The new law allowed charitable trusts to adopt a "total return" spending policy — spending up to 7% of total assets annually, averaged over three years, without court approval. A board vote was sufficient. The law was designed precisely for institutions like the Milton Hershey Trust: wealthy charitable entities whose assets had grown far beyond what traditional income-only spending rules anticipated.

🔥 SMOKING GUN: THE LAW THAT UNLOCKED THE VAULT — AND THE BOARD THAT LEFT IT LOCKED

PENNSYLVANIA STATUTE (1998):
Charitable trusts may spend up to 7% of total assets annually
averaged over at least three years. No court approval required.
Simple board vote sufficient. Permanent records required.

AT 7% OF 1999 ASSETS (~$5 billion at the time):
Additional annual spending capacity unlocked: ~$350 million/year
At then-cost per student: hundreds of additional students per year
Over 10 years: potentially thousands of additional children served

WHAT THE BOARD DID (1999):
ProPublica (2021): “A year later, in 1999, the school appeared
poised to take advantage of the new law.” And then: did not.
No public explanation. No court record. No disclosed vote.
The board simply did not adopt the broader spending definition.

WHAT THIS MEANS:
The constraint on spending was removed by law in 1998.
The board chose, by inaction, to keep spending at the lower rate.
The surplus that had been accumulating since 1934 continued
accumulating after 1998 — not because the law required it,
but because the board preferred it.

JOHN KINNAIRD (1949 MHS graduate, knew Milton Hershey personally):
“His heart was to provide for orphans. He would have wanted
his charity to spend more.”

THE BOARD’S RESPONSE:
“Board members say they are doing what Hershey wanted.”

THE VERDICT:
The man who knew Hershey and the board that manages his estate
disagree about what Hershey wanted. The surplus provides the
evidence for which interpretation is being honored.

The Comparison That Should Not Be Possible

ProPublica confirmed in 2021 that the Hershey Trust's endowment has grown larger than the Ford Foundation — one of the most consequential philanthropic institutions in American history, responsible for funding the civil rights movement, global public health initiatives, and democracy programs across dozens of countries.

The Ford Foundation manages approximately $16 billion. It distributes roughly $600-700 million annually in grants. Its spending rate is approximately 4-5% of assets. It serves beneficiaries across the globe.

The Milton Hershey Trust manages $23-24 billion. It distributes approximately $370 million annually. Its spending rate is approximately 1.5% of assets. It serves one school in one Pennsylvania town.

THE COMPARISON — PRIMARY SOURCED

MILTON HERSHEY TRUST (2024):
Assets: ~$23-24 billion
Annual expenditure: ~$370 million
Spending rate: ~1.5%
Beneficiaries: ~2,100-2,200 students
Scope: One school, Hershey, Pennsylvania
Unspent accumulated income: ~$1 billion

FORD FOUNDATION (2024):
Assets: ~$16 billion
Annual grants: ~$600-700 million
Spending rate: ~4-5%
Beneficiaries: Millions globally
Scope: Civil rights, public health, democracy, arts globally

REQUIRED MINIMUM (private foundations):
5% annual distribution mandate under federal law
The Hershey Trust is NOT a private foundation —
it is a charitable trust. No federal minimum applies.
Pennsylvania’s 1998 law allows up to 7%. The trust spends 1.5%.

THE GAP:
If Hershey Trust spent at Ford Foundation’s rate (4-5%):
Additional annual spending: ~$700 million - $850 million
At $139,000 per student: 5,000-6,000 additional children/year
The trust spends 1.5%. Pennsylvania law allows 7%.
The deed says: as many as income permits.

What Milton Hershey Said — In His Own Words

In 1923 — five years after donating his entire fortune to the trust — Milton Hershey gave an interview in which he explained his decision. The Hershey Community Archives preserved his exact words:

"Well, I have no children — that is, no heirs. So I decided to make the orphan boys of the United States my heirs."

And in a separate account, also preserved: "I never could see what happiness a rich man gets from contemplating a life of acquisition only, with the cold and legal distribution of his money after he is gone. For myself, would I find any further zest in accumulating wealth? No, but now I am more interested than ever in maintaining and improving the morale and efficiency of all my companies. I want to devote the rest of my life to that end, for the school."

The man who said those words did not intend for his gift to accumulate. He intended for it to be spent — on children, at maximum scale, as the deed demanded. He gave away everything. He called orphan children his heirs. He said accumulation held no happiness for him.

The trust that bears his name has been accumulating for 91 years.

✓ THE FAIR ACCOUNT: WHY THE BOARD SAYS IT IS DOING WHAT HERSHEY WANTED

Perpetuity is a real obligation. The deed specifies the trust must exist “in perpetuity.” A trust that spends too aggressively — depleting assets during a market downturn — could fail to serve future generations of poor children. Conservative spending preserves the trust for children who aren’t born yet. This is a genuine fiduciary argument.

Per-student cost is genuinely high. The $139,000 annual per-student cost is not waste. It covers housing, food, clothing, medical care, dental care, counseling, education, extracurriculars, and post-graduation scholarship support. A boarding school model for children from difficult circumstances costs significantly more than a day school. Rapid enrollment expansion without proportional infrastructure would reduce quality.

Enrollment has grown. From approximately 1,050 in 1999 to 2,200 today — a doubling in 25 years — is real progress. The trust approved the Catherine Hershey Schools expansion and the court approved it. The board is not static. It is moving, if slowly.

The 1998 law created an option, not a mandate. Pennsylvania’s statute allows up to 7% spending. It does not require it. The board is not violating the law by spending 1.5%. The question is whether 1.5% honors the deed’s mandate — and that question is answered not by law but by the four words Milton Hershey wrote: as many as possible.

The Number That Ends the Argument

ProPublica's 2021 investigation contains one sentence that the trust has never publicly addressed with a satisfying answer:

In 1999, enrollment at the school was roughly the same as it had been in the 1950s.

Not approximately the same. Not slightly lower. Roughly the same.

Between 1950 and 1999 — fifty years — during which the endowment grew from tens of millions to billions, during which the Hershey Company became a Fortune 500 corporation, during which Hershey Entertainment & Resorts transformed a Pennsylvania factory town into a tourist destination, during which the trust's assets compounded continuously — enrollment was essentially flat.

Fifty years. Flat enrollment. Compounding surplus.

In Post 3, we look at who was making those decisions during those fifty years — who sat on the board, what they were paid, and what structural conflict of interest made "as many as possible" a phrase the trust acknowledged in principle while ignoring in practice.

METHODOLOGY: HUMAN-AI COLLABORATION

PRIMARY SOURCES FOR THIS POST:
ProPublica / Philadelphia Inquirer / Spotlight PA joint investigation (October 2021): “America’s Richest School Serves Low-Income Kids. But Much of Its Hershey-Funded Fortune Isn’t Being Spent.” — confirmed the critical 1999 enrollment data (same as 1950s), 1998 Pennsylvania statute allowing 7% spending, board’s decision not to adopt it, $17B assets, $1B unspent income, 1.5% spending rate, MIT and Georgetown professor quotes, John Kinnaird quote, Bob Heist lawsuit. Hershey Community Archives (hersheyarchives.org): Confirmed 1918 donation details, Milton Hershey’s own words about his gift (1923 interview), Fortune magazine 1934 reference, enrollment timeline. Wikipedia (Milton Hershey School): Confirmed enrollment data points: four students in 1910, 2,000 in 2020, 2,100 in 2023-24, racial integration (late 1960s), girls admission (1977). Zippia / MHS history: Confirmed 1,500 students in 2002, enrollment timeline. MHS Fast Facts (mhskids.org): Confirmed current enrollment ~2,200, Catherine Hershey Schools subsidiary. Pennsylvania 1998 statute: Confirmed in ProPublica investigation as the mechanism that would have allowed expanded spending by board vote without court approval.

WHAT COMES NEXT:
Post 3 documents who was on the board during the decades of accumulation — the same individuals serving as both school board members and Hershey Trust Company directors, collecting $112,000-$130,000 per year from each, with no public accountability for how they exercised the discretion the deed gave them over enrollment.