However, the income generated in India by UBMC to meet all the expenses for their various activities was not sufficient and the deficit was met by grants from Basel. The apprehensions of the War turned out to be true and the Second World War (1939 – 1945) indeed took place. The finances for running the School stopped. Things came to such a pass that the Committee overseeing the Schools was hard put even to pay the salaries of the Teachers in the various Schools and among other actions, the Committee had to think of the sad alternative of closing the School in Mangalore.

However, when the Old Students of BEM School in Mangalore came to know of this, some of them requested the Committee not to take such a drastic action and offered to pay the salaries of the Teachers there. This was a loose arrangement with the Committee being the authority over the School but a few Old students meeting the expenses of the salaries of Staff. This continued till 1958. Then the Committee too felt that it was time to have a better arrangement and told the few individuals helping the School to form a registered Society in which case, the Management of the School could be transferred to the newly formed Society.

After, several rounds of talk, finally this arrangement was accepted by both the parties and in 1959, the South Kanara Educational & Cultural Society was formed with 9 Founding Life Members and it was registered in Mangalore on 31st July 1959 with the Registration Number 18 of 1959.