On March 21, the roughly 70 employees of the Schuler Education Foundation, based in the affluent suburb of Lake Forest, Illinois, were summoned to an emergency all-hands meeting. Over the past two-plus decades, the nonprofit founded and funded by a former president of healthcare giant Abbott Laboratories, Jack Schuler, had spent at least $150 million counseling and tutoring more than 1,800 low-income students from Chicago and Milwaukee-area high schools to help them gain admission to elite colleges; those colleges in turn covered most (if not all) of the students’ tuition and other costs.
The employees, who first had to certify they wouldn’t record anything, were let into a Zoom room where the nonprofit’s executive director Joanne Bertsch read from a script announcing that the foundation would shut down on May 24. Everyone would be let go except for a skeleton crew of seven college counselors left to support students through August.
0:00 Introduction
0:15 How Our Reporters Found Out About Jack Schuler
3:05 Reporting On The Schuler Foundation
5:45 Losing Money In The Market
8:50 The Role Of Healthcare Stocks
12:23 The Impact On Students And Colleges
16:05 How The Foundation Behaved As Their Investments Lost Value
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=b52a7d62f78b
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The employees, who first had to certify they wouldn’t record anything, were let into a Zoom room where the nonprofit’s executive director Joanne Bertsch read from a script announcing that the foundation would shut down on May 24. Everyone would be let go except for a skeleton crew of seven college counselors left to support students through August.
0:00 Introduction
0:15 How Our Reporters Found Out About Jack Schuler
3:05 Reporting On The Schuler Foundation
5:45 Losing Money In The Market
8:50 The Role Of Healthcare Stocks
12:23 The Impact On Students And Colleges
16:05 How The Foundation Behaved As Their Investments Lost Value
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=b52a7d62f78b
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
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LifestyleTranscript
00:00 Hi, my name is Giacomo Tugnini and I'm a staff writer on the Wealth Team here at Forbes.
00:07 Today I'm here with my colleague Matt Duro.
00:08 Hey, Matt.
00:09 Hey, Giacomo.
00:10 And we're here to talk about our recent investigation on the Shuler Education Foundation.
00:15 So to get started, Matt, let's talk a bit about the foundation and sort of how we learned
00:21 about the story in the first place.
00:24 Sure.
00:25 So Giacomo had actually written a story about Jack Shuler, founder of the foundation a few
00:31 years back.
00:32 I think it was early 2021.
00:36 He joined our billionaires list for the first time.
00:40 Thanks to, so basically he was nearly 30 years ago, the former president of Abbott Laboratories,
00:47 a healthcare giant.
00:49 And after being fired from there, sort of reinvented himself as a pharmaceutical and
00:54 healthcare investor.
00:57 So you know, over three decades or so, he did well enough investing healthcare stocks
01:03 to make our billionaires list for the first time.
01:06 So that is sort of how we became acquainted with him at the very beginning.
01:11 And as part of Giacomo's story, you know, around that time, his foundation had made
01:18 a big announcement, a big pledge to spend $500 million over about a decade, convincing
01:26 colleges to enroll more undocumented students, which was sort of a continuation of the work
01:32 that his foundation had been doing, which maybe you can speak to a little bit more.
01:37 Yes.
01:38 And so one of the things that I talked with Jack Shuler about back in 2021 was his foundation,
01:44 the Shuler Education Foundation, which had started in 2001.
01:48 And when we spoke, it was when we added him to the billionaires list with a net worth
01:53 of $1.1 billion, largely from investments in a lot of healthcare stocks, which had obviously
02:00 been on a tear in 2021 due to COVID.
02:04 His largest holding was Quidel, which is a company that was one of the first to gain
02:09 FDA approval for its COVID tests.
02:12 And at the time, he'd made this big announcement, the $500 million pledge, like you said.
02:17 But also he had this foundation, which for, at that point, two decades, and had a program
02:22 called the Shuler Scholar Program, which partnered with schools in the Chicago and Milwaukee
02:27 areas.
02:28 They provided tutoring and counseling to, at that point, I think it was, you know, more
02:35 than 1,500 kids over the course of those 20 years, and helped them gain access to, to
02:42 colleges.
02:44 And a lot of these kids were first generation, low income, sort of underserved, kids from
02:51 underserved communities that they were able to help.
02:56 And then what happened in the ensuing years up to this year is that a lot of those stock
03:02 bets, right, that at the time had been so successful, really, really went south.
03:07 And that's sort of right when you heard about the issues the foundation was having.
03:11 Sure.
03:12 Yeah, so the, the Shuler Foundation, as well as Jack, are based in Chicago.
03:20 I'm from Chicago, and we had sort of heard through the grapevine that the, the foundation
03:25 was sort of shutting down abruptly.
03:28 And I knew that Giacomo had written about Shuler, you know, previously.
03:34 And so that's when we sort of decided to put our heads together.
03:39 And I guess the big part of it was, you know, the good thing about it being a non-profit
03:44 is that it's got, you know, publicly available tax returns for the last 20 or so years.
03:49 So we spent a lot of time, you know, going through those to, to figure out sort of what
03:54 happened as best as we could.
03:56 And then, you know, a lot of, you know, both current and former employees were eager to
04:04 kind of, you know, help us fill in the gaps.
04:08 I would say, given just sort of how shocking this has been for them.
04:16 And yeah, I think, you know, sort of based on a combination of those things, we were
04:20 able to sort of piece together that picture, which was really that, you know, a lot of
04:27 those same stocks, as Giacomo was saying, that made, you know, Shuler so rich at one
04:32 point, which have now, you know, sort of cratered, you know, for lack of a better word, were
04:38 the same stocks that he was, you know, investing the foundation's money in.
04:47 So kind of his foundation's trajectory, I guess, sort of mirrored his in that, you know,
04:56 sort of, at least from our perspective, he kind of came out of nowhere and burst under
05:00 the billionaire scene in early 2021, and then dropped off shortly thereafter.
05:05 Likewise, you know, the foundation's assets ballooned around that same time and, you know,
05:13 enough so that they wanted to make this grand, you know, $500 million pledge.
05:17 And you know, since then, their assets have really plummeted.
05:21 So yeah, I mean, I think I sort of alluded to it a little bit, but I was struck by, you
05:29 know, the reactions of some of the, I guess, both the students, current and former that
05:35 we'd spoke to, as well as, you know, employees, current and former that we spoke to.
05:39 But yeah, what was what sort of reaction did you sense from them?
05:44 But, you know, as it relates to all this?
05:46 Yeah, I think it was it was shock, right?
05:48 Because if you look at in 2021, we estimated his net worth at around $1.1 billion.
05:54 Now, I think we estimate around $200 million.
05:58 You know, the spokesperson for him said that that was too high, but wouldn't provide sort
06:03 of more detailed information on it.
06:04 And then, like you said, looking, you know, when we were looking at, you know, these 990s,
06:11 right, the annual tax filings, securities filings, all this data, and we could see the
06:17 foundation's assets rocket about above $200 million at one point during 2021, or before
06:23 that around 2020.
06:25 And then now, as the last filing in 2022, come way down.
06:30 And those liabilities come up as well, right?
06:32 So that was sort of what we saw in the numbers.
06:35 And then talking to all of you, we spoke to we spoke to about 12 people, right, former
06:39 and current employees, and students.
06:43 And beyond the feeling of sort of shock, right, because the way that they found out was March
06:50 21st, there was a Zoom call for all the employees of the foundation, where they were told that
06:58 they had to, you know, click on a message saying that they wouldn't record the call.
07:03 And then they were told, you know, the foundation's winding down by end of May.
07:08 And then by the end of August, this sort of very small number of staff, seven staff that
07:12 would stay on past May would be gone at the end of August.
07:16 And then the next day, there was this email that we also saw, that was sent out to the
07:21 16 schools the foundation partners with telling them this information.
07:27 And that was the Friday before spring break.
07:29 So sort of a very, it was a time where a lot of these students, the schools didn't have
07:36 much time to sort of react to that.
07:38 And a lot of the reactions we got, I think, were sort of disbelief, right?
07:43 That how could this institution that had been working there in these communities for more
07:49 than 20 years at this point, not all of a sudden, right, because there had been signs
07:55 in the last year of them starting to cut costs and cut programs, but, you know, within a
07:59 year and then so quickly over the last few weeks and months, basically come to an end,
08:05 right?
08:06 When they were under the impression that this was going to be going on for the long haul,
08:12 right?
08:13 And Schuller had signed the Giving Pledge in 2021, which is a movement of philanthropists
08:17 that was started by Bill Gates and Warren Buffett, Melinda French Gates, where people
08:23 basically pledged to give more than half or more of their wealth away before they die.
08:32 And Schuller had said he really wanted to give nearly all of his wealth.
08:36 And he reiterated that to us through a spokesperson recently.
08:41 And then to sort of square that with what was going on was very tough for a lot of these
08:45 people we spoke to to accept.
08:49 And what was sort of your, what did you take from the conversations you had with the people
08:56 we spoke to and then everything that you and I saw in those documents?
08:59 Yeah, I thought it was interesting because I felt like collectively us and them, whether
09:08 it be the former students, current students, former or current employees, we were sort
09:15 of helping each other piece it together because I think they'd been given sort of a partial
09:21 explanation of what had happened and what was going on, not just, you know, very recently
09:28 when the big announcement was made, but, you know, over the last year or so when you were
09:35 alluding to them making some like intermittent steps that might suggest that there was some
09:41 financial hardship like hiring freezes or whatever it might be.
09:46 And they, you know, both in this most recent email that they sent out to the students,
09:52 the schools, the families, you know, basically pointed to, you know, the stock market downturn.
10:02 And then, you know, interestingly, I think one of the most interesting things from my
10:05 perspective that we saw was that an email from the foundation's former executive director
10:14 was shared with us from, I think it was around September 2022.
10:18 And it really, you know, provided maybe some, the best insight I think we could get into
10:26 the thought process without, you know, the leaders of the foundation actually telling
10:31 us what the thought process was as to why, you know, they had so much of their money,
10:38 you know, concentrated in a small number of stocks that had been wildly fluctuating and
10:44 why at no point they, you know, decided to diversify their assets.
10:50 And basically, you know, what the guy said was, you know, if we sell now and these stocks
10:55 are, you know, historically undervalued, which is sort of an interesting term because
11:03 relative to what, like they're crazy, you know, peaks when they were booming, I guess.
11:09 But the thought process was if we sell now, you know, we're going to miss out on the rebound
11:15 and we're not going to be able to help as many people in the future.
11:18 And of course that rebound never came.
11:22 But yeah, I think what I was trying to say was like, yeah, they'd been told it was the
11:27 stock market, but like, you know, on its face, like that explanation doesn't really make
11:32 sense right now because the stock market's, you know, sort of booming as we speak.
11:36 So it was the fact that like they were concentrated in such a small number of highly speculative
11:43 stocks that ultimately proved to be their undoing.
11:46 So I think that it was something that, you know, and we've heard, you know, after publishing
11:53 our reporting that really surprised the folks at the foundation that we spoke with.
11:59 They weren't aware of, you know, even though it, you know, it was out there publicly for
12:03 the most part in these tax returns.
12:05 But like who looks at that?
12:07 Like, you know, if we weren't reporting this story, I wouldn't have been looking at that
12:10 either.
12:11 But, but yeah, that was, you know, I think us able to like expand a little bit on the
12:18 partial explanation that they got.
12:21 And then the impact we've also seen on that big initiative he'd announced back in 2021,
12:26 right, is that we reached out to all 10 schools that were in it.
12:31 And so the impact hasn't just been on the foundation shutting down and the impact on
12:35 the kids in high school that were part of this program, but also that initiative that
12:40 he made back in 2021, the 500 million, an eight of the 10 schools, right, told us that
12:46 the foundation had suspended payments.
12:49 And so we don't know how much of that was actually given out because there was sort
12:54 of incomplete information in the tax filings we saw.
12:58 And also we didn't get a sort of complete answer on how much had been paid out.
13:02 But that's sort of another casualty, right?
13:04 The main impact is we have, you know, the foundation is going to honor scholarships
13:09 for kids who are currently in college and for partial scholarships for freshmen and
13:16 sophomores and then the other scholarships for juniors and seniors.
13:20 But then beyond the fact that they're not going to get the tutoring and the counseling
13:24 that made it all so effective in the last 20 years, and it's not obviously going to
13:28 accept more kids in the future, we also have this big initiative that sort of kind of put
13:33 him on the map for us back in 2021.
13:36 That's also effectively been canceled.
13:38 The foundation told us that it has been canceled, that they plan on trying to allocate more
13:43 resources to it.
13:44 But, you know, we've been told also by the universities that the payments have been suspended
13:49 and that also paints a picture of the impact that all of this is having, right?
13:56 Not just in, no, not only in the Chicago and Milwaukee areas where these students are that
14:02 are in the program, but also more broadly on the bigger impact that Schuller wanted
14:06 to have.
14:07 Yeah, for sure.
14:08 And I think, you know, one of the things that I had to like figure out in reporting this
14:15 was when I went in, I assumed that like what Schuller must be doing because it was like
14:22 an educational nonprofit that helps send kids to college was they must be giving massive
14:27 college scholarships.
14:29 And then you like look at the size of these scholarships relative to the cost of, you
14:34 know, tuition at these schools they're sending them to, which are, you know, top tier schools
14:38 and you're like kind of scratch your head and it's like 10,000 over four years.
14:42 Like, okay, like that doesn't, that can't be all they're doing.
14:47 And came to understand that, you know, the scholarships, which is, you know, the one
14:52 thing that they are, you know, the one big thing, I guess, going to be able to honor
14:58 going forward were such a small piece of what the foundation did because, you know, so much
15:05 of it was, you know, preparing these kids who do not come from schools that have, you
15:13 know, the same resources that a lot of us were fortunate enough to have or, you know,
15:18 weren't able to rely on parents who had been through the college, you know, admissions
15:23 application process before.
15:25 So much of what the foundation was doing was, you know, getting the kids to the stage where
15:31 these schools would then say, okay, we'll pay for all or most of your tuition.
15:37 So that to me was something that took me a little time to get my head around and understand
15:46 that, okay, even though they're honoring these $10,000 scholarships, which is what they promised,
15:51 like there is this huge impact.
15:56 And so, yeah, I think that was, yeah, obviously the impact has been huge.
16:05 Do you think we got a sense of, so they continued like up until very near the end when things
16:14 had already started to go south, I guess, like bringing new kids into the program.
16:21 Do you feel like we ever got a good sense of like why that might have felt like a good
16:25 idea to them or no?
16:27 Yeah, I think what we found was also right in last year, May and June, they accepted
16:34 a new cohort of kids into the schools, into the program.
16:39 And then over that time between then and, you know, March when they announced they were
16:44 winding down, we saw sort of several times where they decided to cut costs more.
16:49 And honestly, I think this is the takeaway we both had, is that this was a situation
16:54 where it gradually became clear to them that these stocks that they bet all of their assets,
17:04 all their assets were concentrated in, were not going to bounce back.
17:09 And even up to June of last year, they still wanted to keep this going in the long run
17:14 and thought that they could.
17:16 And then they kind of saw the writing on the wall and decided to wind it down after that.
17:23 And that's, you know, you really do wonder when you're reporting this, what if this had
17:31 been diversified before?
17:32 What if, you know, I think there was one stock that invested in Seleno Therapeutics, which
17:38 had they sold, you know, had they kept that stock, for example, because they sold some
17:41 of it a couple years ago, they actually would have had more money, right?
17:44 Well, with other ones that they were more concentrated, and it was the opposite.
17:47 And so really, the takeaway that I've had is that it's a story of this former billionaire
17:56 investor who, you know, made a set of concentrated bets on these various companies that were
18:05 working well for quite a while and then stopped and sort of went all in, right, both personally
18:10 and through his foundation.
18:11 And then him and the other leadership of the foundation weren't able to change that strategy.
18:18 And ultimately, despite all of the work that they did in the last 20 years that had a huge
18:23 and real impact on these kids, many of which we spoke to, and also the staff that worked
18:29 there, is now coming to an end by the end of August.
18:34 Yeah.
18:35 I agree, and it's a sad story where I don't think, you know, obviously there are really
18:44 no winners in this story.
18:46 It's sad for everyone involved, including Jack, I would say, who I never was able to
18:54 speak to, but I know you did.
18:56 And, you know, my impression is, you know, I don't think you, you know, spend 20 years
19:02 and the amount of money that he did on a project like this if you don't really care about it.
19:09 And you know, people who know Jack obviously a lot better than I do, or even you do, based
19:15 on the conversations you had with him, who spoke with us, you know, sort of attributed
19:23 all this to him just not wanting to accept defeat when it came to these biotech or healthcare
19:31 bets and, you know, obviously that ended very badly.
19:36 So yeah, I think it's a sad story, even for him.
19:40 It really is a sad story seeing the impact it's had on these kids, even after all these
19:44 years of really good work.
19:47 But it was great reporting on the story with you, Matt, and getting to the bottom of what
19:50 happened there.
19:52 And thanks for being here with me today.
19:54 Yeah, thanks, Jack.
19:56 And you can read the story on Forbes.com.
19:58 Thank you.
19:58 Thank you.
19:58 [END]