Pearson Charitable Foundation Settlement to Support STEM Teachers

New York State attorney general Eric T. Schneiderman has announced a $7.7 million settlement with the Pearson Charitable Foundation that will result in millions of dollars being directed to efforts to recruit and retain high-quality K-12 teachers in New York and other states.

Under the terms of the settlement (12 pages, PDF), which resolves an investigation by the attorney general's office into the foundation’s misuse of charitable assets to benefit its for-profit corporate parent, Pearson, Inc., the foundation will pay $7.5 million into a fund that will be used to support programs affiliated with 100Kin10 — a multi-sector network launched in 2011 by the Carnegie Corporation of New York whose members are working to meet a national goal of training a hundred thousand new science, technology, engineering, and math teachers within a decade.

The Pearson Foundation also has agreed to adopt program changes and governance reforms to ensure that its assets are not improperly used for the benefit of Pearson, Inc., and will pay $200,000 to help cover the costs of the investigation. The investigation by Schneiderman's office found that Pearson, Inc., the largest for-profit education company in the world, had developed course materials in partnership with the foundation which it intended to sell commercially, and that the foundation had funded a series of conferences for state education officials to which only Pearson sales personnel were invited.

"The law on this is clear: Nonprofit foundations cannot misuse charitable assets to benefit their affiliated for-profit corporations," said Schneiderman. "Moving forward, funds for Pearson Charitable Foundation will be used exclusively for legitimate charitable purposes, beginning with millions of dollars to help ensure that every public school student has a great teacher in the classroom."

"[W]e recognize there were times when the governance of the foundation and its relationship with Pearson could have been clearer and more transparent," said the foundation in a statement. "Over the past two years, the foundation has taken several steps to strengthen its governance, beginning with the addition of independent directors to the board and the adoption of stronger operational systems. Under the settlement, these efforts will be further enhanced by the creation of a three-person audit committee."