This Billionaire's Bad Bets Left Hundreds Of Underserved Scholarship Students In Limbo

Forbes

Throwing good money after bad and refusing to cut his losses with risky healthcare bets cost Jack Schuler most of his fortune—and left hundreds of underserved kids in the lurch.  Read the full story on Forbes: https://www.forbes.com/sites/giacomotognini/2024/04/16/inside-the-collapse-of-a-former-billionaires-foundation-for-low-income-students/?sh=1cbc813f2f78  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 Here's your Forbes Daily Briefing for Thursday, April 18.

00:05 Today on Forbes, this billionaire's bad bets left hundreds of underserved scholarship

00:11 students in limbo.

00:14 On March 21, the roughly 70 employees of the Shuler Education Foundation, based in the

00:19 affluent suburb of Lake Forest, Illinois, were summoned to an emergency all-hands meeting.

00:26 Over the past two-plus decades, the non-profit, founded and funded by a former president of

00:30 the healthcare giant Abbott Laboratories, Jack Shuler, had spent at least $150 million

00:36 counseling and tutoring more than 1,800 low-income students from Chicago and Milwaukee-area high

00:42 schools to help them gain admission to elite colleges.

00:45 Those colleges, in turn, covered most, if not all, of the students' tuition and other

00:50 costs.

00:51 The employees, who first had to certify they wouldn't record anything, were led into a

00:56 Zoom room where the non-profit's executive director, Joanne Bursch, read from a script

01:00 announcing that the foundation would shut down on May 24.

01:04 Everyone would be let go, except for a skeleton crew of seven college counselors left to support

01:09 students through August.

01:11 Shuler, who had been caring for his wife before she died on April 4, and his daughter, the

01:16 foundation's co-founder, Tanya Shuler-Sharman, sat there in silence.

01:21 No questions were taken, and the meeting wrapped up after about five minutes.

01:26 The next day, high schools and their students, most of them black or Latino, and set to be

01:31 the first in their families to attend college, were notified by Bursch in an email, quote,

01:36 "The Shuler Program has been funded since 2001 with shares of stock in various companies.

01:42 Heartbreakingly, these assets have plunged in value.

01:45 We simply do not have the resources to continue."

01:50 The decision came as a shock to the foundation's staff, most of whom are embedded in the 16

01:55 high schools served by the program, where students are otherwise guided by understaffed

01:59 and overwhelmed college counselors, if at all.

02:02 A current Shuler Education Foundation employee says, quote, "Pulling out in this way is doing

02:07 a lot of harm to these communities.

02:09 These students put in a lot of time and commitment, and for us not to uphold our side of the bargain

02:14 is really tough for me to wrap my head around."

02:18 Just three years earlier, Shuler and the foundation were riding high, as Shuler joined Forbes'

02:24 billionaire ranks in April 2021, thanks largely to a stake in Quidel Corp., one of the earliest

02:30 companies to receive FDA approval for COVID-19 tests.

02:34 A month later, the foundation announced its biggest initiative yet, a pledge to spend

02:39 $500 million over a decade encouraging universities to enroll more undocumented students.

02:45 But payments were suspended for that program, called the Shuler Access Initiative, as early

02:50 as last August.

02:52 Eight of the ten colleges in that program confirmed to Forbes that Shuler halted its

02:56 funding, which was intended to be matched by other donors dollar for dollar.

03:01 Some private donors, such as billionaire Steve Tisch, who gave $10 million to Tufts University

03:05 for these undocumented students, have still honored their matching grants.

03:10 And some colleges have turned to fundraising or are drawing on their own reserves to make

03:13 up for the lost funding from Shuler.

03:16 But it still leaves a gap.

03:18 The foundation tells Forbes that the initiative is not canceled, and that it hopes to add

03:22 additional funds, but did not respond to follow-up questions on the subject.

03:27 How did a foundation that was ready to spend $500 million just three years ago suddenly

03:31 find itself on the verge of going broke?

03:34 To answer that question, Forbes reviewed tax documents, securities filings, and internal

03:39 emails, and interviewed 12 current and former employees and students in the Shuler Scholar

03:44 Program, the main program funded by the Shuler Education Foundation.

03:49 The nonprofit's stunning reversal of fortune was tied to the ups and downs of its aging

03:53 benefactor, who obviously cared deeply about both the students he served and the companies

03:58 he hoped would change the world.

04:00 But Shuler took excessive risks that blurred the line between his foundation and his speculative

04:05 personal investments.

04:06 And in attempting to bail out his struggling for-profit ventures, the 84-year-old ended

04:11 up sinking his charity.

04:13 Forbes estimates that Shuler's personal portfolio of volatile stocks, most held in trust for

04:18 his family, and real estate are currently worth around $200 million, down from $1.1

04:25 billion in April 2021.

04:27 A spokesperson for Shuler said the estimate was too high, but didn't provide sufficient

04:32 information to substantiate that claim.

04:35 It seems unlikely Shuler has significant cash or other assets outside of that, given the

04:39 precarious financial situation of his foundation.

04:42 But some former employees of his nonprofit question just how much financial pain the

04:47 Shulers are feeling.

04:49 For full coverage, check out Giacomo Tagnini and Matt Duro's piece on Forbes.com.

04:56 This is Kieran Meadows from Forbes.

04:58 Thanks for tuning in.

04:59 [MUSIC PLAYING]

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