According to The New York Times, the New York State Attorney General has exposed the supposedly non-profit Pearson Foundation for what it really is, a partner with the for-profit wing of the global Pearson publishing mega-giant. The Pearson Foundation agreed to pay a penalty of over seven million dollars to New York State that will be used to prepare teachers to work in high needs communities. According to New York State law, foundations are prohibited by law from using charitable funds to promote and develop for-profit activities.
While the Pearson Foundation and Pearson for-profit were supposed to be separate legal entities, they operated in tandem. Pearson for-profit is the largest donor to the Pearson Foundation and the staff of the Pearson Foundation included several Pearson for-profit employees. Until 2012, members of the Pearson Foundation Board of Directors were all executives at Pearson for-profit.
The New York State Attorney General's office found that the Pearson Foundation was developing course material and software aligned with new national Common Core standards and high stakes assessments that Pearson for-profit was selling to states and school districts. Pearson Foundation was also involved in drumming up business for Pearson for-profit. The foundation paid for education officials to attend "conferences" in places like Helsinki and Singapore where Pearson for-profit pitched products and services.
The report issued by Attorney General Eric Schneiderman accused Pearson of using its Foundation to secure endorsements and donations from prominent funders including the Bill and Melinda Gates Foundation. In April 2011 the Pearson and Gates Foundations formed a partnership to design online reading and math courses. According to the Attorney General's report Pearson executives wanted to market the material and predicted potential profits would be worth tens of millions of dollars. After Schneiderman's office started to investigate, the Pearson Foundation sold the courses to Pearson for-profit for $15.1 million.
A spokesperson for Pearson claimed: "We have always acted with the best intentions and complied with the law. However, we recognize there were times when the governance of the foundation and its relationship with Pearson could have been clearer and more transparent." As part of the agreement, the Pearson Foundation agreed to appoint three board members to review financial transactions that might benefit Pearson for-profit and pledged to limit the involvement of Pearson for-profit executives and sales personal in educational conferences that it sponsors.
What I do not understand is why Pearson for-profit and the Pearson Foundation do not face criminal charges and why New York State will continue to do business with a foundation and a company that admitted under pressure, to have violated state law.