About Pearson, the Golden Goose State Standards, And Then Some
On December 13, 2013, Pearson, Inc., agreed to pay a $7.7 million settlement for allegedly using its nonprofit, Pearson Charitable Foundation (PCF), to assist its profit-making parent corporation in developing educational materials– including software.
In this post, I would like to offer additional discussion of Pearson the For-Profit, Pearson the Nonprofit, and some friends both have made along the Common Core way.
I’ve been reading tax forms again.
Allow me to begin with a word about nonprofits.
Any corporation is able to start its own foundation– the idea being that the foundation provides an opportunity for the corporation to spend charitably– and garner a tax break for doing so.
Under the US tax code, foundations fall under 501(c)– tax-exempt organizations. The tax-exempt code specific to public charities and private foundations is 501(c)3.
The 501(c)3 nonprofit is limited in its ability to lobby since contributors are allowed to deduct contributions. For this reason, some 501(c)3 nonprofits also have a 501(c)4 “social welfare” counterpart. The 501(c)4 allows for unlimited lobbying but not for tax deduction of contributions. Therefore, donors wishing to both support the lobbying and take the tax deduction are able to donate to the 501(c)3, with the 501(c)3 passing the money on to the lobbying 501(c)4.
Such activity is perfectly legal.
What is not legal is for a 501(c)3 to use its tax-exempt positioning in order to profit its parent corporation.
It is legal for Pearson, Inc., to have its own nonprofit, tax-exempt foundation, PCF.
It is also legal for the for-profit Pearson, Inc., to donate up to ten percent of its taxable income. (Other stipulations are involved here, including the rule that to qualify as “publicly supported charity,” at least ten percent of PCF’s income must come from public support.)
As noted on the PCF 2011 990, Pearson, Inc., is the parent organization of PCF, with Pearson North America, Pearson United Kingdom, and The Penguin Group listed as PCF “sister” organizations. (All are run by Pearson, Inc.)
As the “parent,” Pearson, Inc., has control over the board of PCF.
The nonprofit PCF does not act independently of for-profit Pearson, Inc.
Here is where “shady” comes into play: It is easy to see where education, for-profit control of a nonprofit could cause problems in this age of education privatization.
On its 2008 990, PCF is referred to as “the ‘Charity.’” It sounds so benevolent– and provides the public image of a corporation “giving back” to society. Indeed, the “Charity” does some of that. In 2008, the Charity had $720,000 in total end-of-year assets; it’s largest expense involved spending $2.3 million in “digital arts”–”…creat[ing], distribut[ing], and licens[ing] educational software to non-profit community organizations at no cost.”
It also spent $2.2 million “…to deliver innovative learning programs to schools….”
In 2008, the Charity reported $10.5 million in total revenue. Over half ($5.8 million) was donated by parent Pearson, Inc.
Keep in mind that 2008 was the year that the National Governors Symposium began its push for “common standards”– the beginnings of the current Common Core State Standards (CCSS).
Keep in mind also that the Council of Chief State School Officers (CCSSO) is one of the two CCSS copyright holders.
The Charity: Add CCSSO
Now, I know readers will find this next statement surprising:
From 2009 to 2011, the Charity decided to donate to CCSSO.
In 2009, the Charity (now called “the Foundation”) paid CCSSO a $100,000 “grant.”
In 2010, the Charity increased its grant to CCSSO $340,000.
In 2011, the Charity paid CCSSO another $100,000.
Throw the copyright-holding dog a half-million bone.
I’m guessing “the parent” smelled the profit potential.
In 2009, the Charity’s total revenue was $13 million; $8 million was paid by parent Pearson, Inc. Total end-of-year assets equaled $2.4 million.
In 2010, total revenue rose to $17 million, with Pearson, Inc., paying $12.3 million. Total end-of-year assets equaled $1.6 million.
In 2011, total revenue dropped slightly to $16 million. Total 2011 end-of-year assets rose to $4.8 million.
The Charity: Add Bill
As it turns out, 2011 was an interesting year for the Charity. Pearson, Inc., paid $6.5 million and Charity “sister” Pearson North America paid an additional $3.1 million.
And Bill Gates joined in for an additional $3 million:
Pearson Charitable Foundation
Date: February 2011
Purpose: to support the development of open access courses for 6th and 7th grade mathematics as well as 11th and 12th grade English language arts
Guess what an “open access” course is?
Let us consider an excerpt from the New York Times article on the December 13, 2013, Pearson Compromise:
Around 2010, Pearson began financing an effort through its foundation to develop courses based on the Common Core. The attorney general’s report said Pearson had hoped to use its charity to win endorsements and donations from a “prominent foundation.” That group appears to be the Bill and Melinda Gates Foundation.
“Pearson Inc. executives believed that branding their courses by association with the prominent foundation would enhance Pearson’s reputation with policy makers and the education community,” a release accompanying the attorney general’s report said.
Indeed, in April 2011, the Pearson Foundation and the Gates Foundation announced they would work together to create 24 new online reading and math courses aligned with the Common Core. [Emphasis added.]
As of February 2011, Bill was officially connected to Pearson. This Pearson-Gates connection was announced in April 2011, with the Gates name now clearly a power for endorsing CCSS.
Learning in Motion
It just so happens that in 2011, the Charity’s top expense was $2.1 million for “project development” through a California company, Learning In Motion.
Learning in Motion offers this 2013 employment opportunity on the LinkedIn Education Consultants Network:
Learning in Motion seeks freelance educational professionals to write and review K-11 Math content, and edit Math and ELA content that aligns with the CCSS. …
Funded by The Pearson Foundation and The Gates Foundation, this project’s objective is to produce digital curriculum that is engaging, rigorous and aligns with CCSS. Immediate need is for Math writers for grades 3-5, Math writer/reviewer for 9-11 (Algebra II, statistics and probability) and editors. In the near future, we’ll need Math item writers. We’re also looking for experienced ELA editors. Assignments may last up to 7 months. Work from home; flexible hours; competitive rates. If interested, please email resume and desired pay rate to email@example.com. [Emphasis added.]
Two foundations “helping with” CCSS. So benevolent.
Pay no attention to the for-profit lurking in the shadows.
Forget Charity: It’s the Money That Matters
Sure sounds like Gates is helping Pearson cash in on the curriculum and assessment components wed to CCSS– the start-to-finish process announced by NGA in a June 2008 press release.
The endgame for this education for-profit-hid-behind its-nonprofit?
Why, profits, of course. From the New York Times article:
Pearson executives believed the courses could later be sold commercially, the report said, and predicted potential profits of tens of millions of dollars. After (New York State Attorney General) Schneiderman’s office began its investigation, the Pearson Foundation sold the courses to Pearson for $15.1 million. [Emphasis added.]
So, Pearson volunteers for its $7.7 New York hand slap.
Perhaps Pearson might funnel this $7.7 mil through its Charity in order to get a tax break and make it appear that paying the hand slap is actually a Pearson-determined act of kindness.
After all, appearance is everything.
Hand slap fine aside, Pearson continues on its road to promising profits in Los Angeles’ iPad fiasco– a projected $60 million annually for the for-profit Pearson.
Pearson is also involved in grading teachers in training using student test scores. More profits.
The Moral of the Story
Forget the kids. It really isn’t about them, anyway.
The real utility of CCSS is that it provides a matchmaking forum for those with endless wallets and a consequence-free addiction to “education stuff” to meet and marry those originally from abroad with an endless quest for profit and who are even willing to prostitute their own philanthropy for As Much American Money As Possible.
I’m sure they will be very happy together.