The Pearson Charitable Foundation, the beleaguered nonprofit arm of corporate education giant Pearson, announced Tuesday that it is closing at the end of 2014.
In a statement posted on its website, the company said the board of directors of its foundation approved plans to cease operations and close the philanthropy at the end of the year.
“This follows a decision by Pearson PLC to integrate all of its corporate responsibility activities and functions into its business as a way to maximize social impact, and to no longer fund the foundation as the primary vehicle for its philanthropic and community activities,” Pearson officials stated.
The activities of the charitable foundation came under harsh scrutiny last year, when the not-for-profit organizaiton agreed to pay $7.7 million in a settlement with New York state, which accused it of improperly using assets to benefit its for-profit arm, Pearson Inc.
Digital content and course materials developed with support of the foundation were central to the investigation, which was led by New York Attorney General Eric T. Schneiderman. Some of those materials ended up being part of the Los Angeles Unified School District’s troubled purchase of Pearson curriculum coupled with Apple iPads, a deal last year that earned Pearson between $4.5 million and $9 million for its efforts, according to estimates based on an internal school board review released in August. District officials have said they are now rethinking that massive technology project.
In their case against Pearson, New York state officials argued that the company and its foundation planned that the courses developed would be sold commercially by Pearson Inc.
“Internal business analyses prepared by Pearson Inc. projected that potential profits from sales of the courses and related offerings could be in the tens of millions of dollars,” the state indicated in its release.
However, in the settlement papers released on Dec. 11 last year, Pearson and its foundation denied “any violation of law in this matter.” In a joint statement issued at that time, Pearson and its foundation maintained that the company had “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.”
In June 2012, the Pearson foundation’s board ratified the sale of the partially developed courses at a price of $15.1 million—a transfer that subsequently took place, the attorney general indicated.
New York state maintained that Pearson Inc. provided “substantial funding” to its charitable foundation to support the development of common-core offerings, in order to attract support from a “prominent” philanthropy that backed the standards. Pearson Inc. also wanted to build “credibility for its commercial products,” through the receipt of external foundation funding, the state alleged.
Pearson’s foundation drew support from some of the biggest names in education philanthropy. In 2011 the Bill & Melinda Gates Foundation dedicated $3 million to help fund the Pearson Foundation’s work in creating 24 online reading and math courses aligned with the common core.