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.
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