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About Pearson, the Golden Goose State Standards, And Then Some

December 15, 2013

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.

Nonprofits 101

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.

The “Charity”

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
Amount: $2,999,047  

Guess what an “open access” course is?

Digital learning.

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 jobs@learn.motion.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.

25 Comments
  1. Mercedes, I am an long-time readef your blog and SO appreciative of your reporting. I am a former English teacher who left the classroom to try to make changes I felt were unable to happen within the walls of the system. I started a nonprofit and had to wait 18 months for 501c3 status. I have followed Pearson for a decade now. Started when I was at NCTE in 2006 and they rented out the entire Tavern on the Green in NYC. It was an adoption year. Our “rep” sat at our table and had a rolex on, talked about his yacht in the Bahamas and the new car he was getting soon. I don’t have a problem with people making money, not fearful of captialism, but as I looked around that chandeliered room I knew it was wrong and I felt dirty, like I had to take a shower to wipe off the hypocrisy. I imagined that one night could have paid for a year of our mentoring program. (Then, i had not created the programs).
    Todd Finely also has a lot of research involving Pearson and he came to our summer workshop to share this with a few hundred teachers. It is so important for educators to be aware and PROACTIVE about this network driving our system.
    I don’t know how you find the time. But I thank you thank you thank you for your dilligence and research. Keep up the great work. I will be sharing your post in our newsletter today to 6,000 + teachers across the US.

  2. I think the crux of all this is the insidious effort to privatize all schools. If these programs were merely an alternative to an excellent public school program that should never be for profit, then if people want to send their children to a charter, parochial, for-profit school and pay for it (but not with taxpayer money) then so be it. But first and foremost, we need excellent teacher training at the colleges, which is now lacking. We need caring and well-educated teachers hired in the public schools making livable wages and allowed the right to have collective bargaining. The NYT had an article yesterday which said teachers must have training as well in behavioral training. If you can’t get the students’ attention, you can’t teach–and that’s very true. The danger now is the profit-making ventures that are beginning to dominate our school systems with the guise of choice in a democracy–that’s not their goal: it’s profit with generally untrained teachers, using taxpayers’ money which they claim we don’t have, and no accountability. It’s a fraud; Pearson/Gates is a fraud and so are the Bush, Koch, Murdoch, Bloomberg, and all the other for-profit ventures. We have a public corporations that are determined to privatize every aspect of our society..

    • Corporate education “reformers” want to privatize education, but not “all schools,” because they need dumping grounds for the kids that privatized schools don’t want, especially children with high needs, which they take and keep at lower rates from neighborhood public schools. That includes children with disabilities, English Language Learners, children with behavioral challenges (or who just won’t obey their strict boot-camp rules) and students with low test scores that bring down their averages –who are often rejected just before the testing time of year comes around.

      And don’t kid yourself about traditional teacher training. “Reformers” such as NCTQ trash it because they want to control and profit off of that, too. They have no intention of learning from places like Finland. They are the same folks who promote the 5 week trained “teachers” from Teach for America. They also support the new “graduate schools” of education which charter chains have opened up in order to train teachers in their ONE pedagogical method, that of the drill sergeant. No need for teachers to learn much else when privatized schools reject high needs students and teachers are expected to just read a Pearson scripted curriculum in their classrooms.

      • We’re in full agreement. In Chicago, they’re leaving a few public schools open to dump, not educate those kids. I worked with the hardest kids, I know how little the system cares about them. After I retired, I also supervised teachers. I tried to put several on remediation or not have them go into education–the university refused–too much work for them and didn’t want to deal with complaints. I saw teachers go into the system who couldn’t spell or write, let alone the other skills like behavior management and critical thinking and creative methods of teaching outside the box. But it’s incredible that some of the charter companies with their massive endowments are actually philosophically indoctrinating students in business school, then turning around and putting these business school grads into charter schools for a two-year stint with no training in education.

      • I have supervised student teachers and student interns for a number of Chicago area colleges and I’ve had very different experiences from what you described. All colleges in Illinois are required to have gate keeping protocols in place to prevent unqualified people from moving from one stage to the next in Teacher Education programs. I’ve personally witnessed how that has been appropriately enforced at each turn by colleges. The state also requires teacher candidates to pass tests of basic skills, professional teaching and content areas. Of course, no standardized test measures all of the qualities of teachers and teaching, so multiple measures are used, including input from college faculty who are outside schools of education on the dispositions of teacher candidates.

        I have also mentored/coached new and veteran teachers for CPS, Most of the teachers I’ve worked with have been consummate professionals. For the few I’ve had serious concerns about, CPS has always been very supportive of me and my efforts to facilitate remediation.

    • Yes. I believe that you are correct. The privatization of schools, kindergarten through 12th grade is part but not all of their ultimate objective.

      Simultaneously, we have the supposed “democratization of higher education” whose goal is to replace community colleges, our great land grant public universities AND our private colleges and universities (Princeton, not Univ. of Phoenix diploma mills!) with primarily or exclusively online “digital” learning. I refer specifically to the MOOC insanity that has consumed higher ed in the U.S.A. for the past year. It is also spearheaded by guess who? Bill Gates and the usual cast of technocrat solutionists: Google, Stanford University’s computer science department, Silicon Valley, Seattle area and New York City venture capital investors are the primary funders.

      For example, there is the so-called Khan Academy, where a young man with a bachelor’s and master’s degree in math and an engineering discipline from MIT, and all of one year’s work experience, is now teaching about fractional reserve banking and 2000 other topics under the sun, via videotaped lectures posted on Youtube. Funding was courtesy of Google, Bill Gates and various soi disant charitable foundations, be they 501(c)(3) or 501(c)(4).

      Important for Ms. Deutsch! Be on the alert for a new taxation travesty, the B-corporation. B stands for Benefit. They have some nebulous “social justice” requirements (that aren’t social justice at all, and I do know what it means; I am a graduate of Swarthmore College) in exchange for advantageous tax treatment. B-corp legislation is being pushed through, state by state, by the same crowd that I described earlier: Venture capitalists, Ms. Duckworth’s new education company (like she really needed that $500,000 from the MacArthur Foundation for her education start-up, whose partners and board of directors include hedge fund managers, and even hedge fund manager wives), charter school companies, “sharing economy” websites that are thinly-veiled excuses for labor exploitation of recent or aspiring college students, whether American or from developing nations, as interns or piecework online laborers.

      The larger goal, however, is EXACTLY what you described, namely,

      for-profit corporations are determined to privatize every aspect of our society.

      It is essential to remember that political partisanship has minimal relevance. Democrats are represented as often as GOP. Religion is not especially pertinent either. Conservative Christian Teachers of America is of the same mind, often for the same reasons, in not wanting Common Core and charter schools as teachers with active union representation in Chicago and Philadelphia, those who still have jobs, that is. It is equally bad for public school teachers in techno-paradise northern California and the Seattle area.

  3. This is getting away with breaking the law, plain and simple. Scandalous. http://www.huffingtonpost.com/alan-singer/pearson-caught-cheating-s_b_4439043.html

  4. Mercedes, is the Pearson Corporation a public stock on the Board of Trade? If so, I would love to know the names of some of those stockholders!

  5. Reblogged this on Middletown Voice and commented:
    Follow the money – is it for the kids or the love of money?

  6. ColoMom permalink

    Why is Pearson redesigning Colorado schools?

    This makes me nervous and also makes me wonder who got the money this time. Of course the Pearson plan involves aligning a new curriculum and new evaluations-which is money for them but why would Colorado Dept of Education agree to this?

    2010- Pearson’s K-12 Solutions School Turnaround Education Partnership (STEP)-
    “Colorado picked Pearson K-12 Solutions on January 22 as a comprehensive school improvement partner to help turn around its underperforming schools.”

    http://www.pearsoned.com/pearson-to-work-with-colorado-in-massive-effort-to-turn-around-underperforming-schools/#.UrKL3mS9Kc0

    • The 2008 NGA goal is to control (and privatize) the entire process– standards, curriculum, and testing.

  7. outstanding reporting, again! I do hope that Diane will post this on her blog as well. This is very, very important work.

    • fnjsmp permalink

      Picked up on Mercedes Schneider’s revelatory analysis via Diane’s blog this AM (May 29, 2014) — too late to incorporate into a recently updated CLIPS Guest Commentary “School Wars 2014: Conflicts over K-12 Education Technology, CCSS, and VAM” that aimed to enhance the argument against the widespread commercialization of K-12 education as well to introduce readers to:

      1. Devra Davis’ concern about the unmet need to investigate the potential danger to the brains of young school children to the electromagnetic radiation emanating from wireless products that are part and parcel of this commercialization, and

      2. Mercedes Schneider’s new book, A Chronicle of Echoes: Who’s Who in the Implosion of American Public Education..

      The updated commentary has been re-posted at https://collegeathleticsclips.com/news/schoolwars2014conflictsoverk12educationtechnologyccssandvam.html

      I plan to send the link to Arne Duncan & company as well as to (my)Congresswoman Jan Schakowsky, Illinois Senators Dick Durbin and Mark Kirk, Jim Rice, Senator Chuck Grassley’s LA for education, and to a number of teachers.

      Finally, to get a good sense of the “big picture” re: the power of wealth to undermine democracy in America, see the Robert Reich documentary “Inequality for All” that has been touted by Bill Moyers. I believe there are ideas worth considering for the fight against the commercialization of K-12 education on the website http://www.inequalityforall.com

      Frank G. Splitt
      Former McCormick Faculty Fellow
      McCormick School of Engineering and Applied Scuence
      Northwestern University

      http://thedrakegroup.org/authors/splitt

Trackbacks & Pingbacks

  1. Common Core: Can the Standards be Separated from For-Profit (hidden or not) Implementation and Assessment? | Striving for Simplicity
  2. Mercedes Schneider Studies Pearson’s Tax Returns | Diane Ravitch's blog
  3. Time to Investigate Pearson in Texas | Behind Frenemy Lines
  4. It’s Time to Investigate Pearson in Texas, Too | NewsCenterd
  5. It's Time to Investigate Pearson in Texas, Too | We Report
  6. BUZZ: Pearson Foundation Pays $7.7M in Common Core Settlement | sheri•ann•cheng
  7. Incompetent Pearson “Wins” PARCC Contract. Big Surprise #stopcommoncore | Stop Common Core Illinois
  8. Mercedes Schneider on the Warm Relationship Between Gates and Pearson | Diane Ravitch's blog
  9. Educational Policy Information

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