Pearson’s Nonprofit Arm Settles Benefits Investigation

December 13, 2013       The NonProfit Times      

The nonprofit arm of publishing giant Pearson Inc., agreed Thursday to pay $7.7 million to settle an investigation into whether it gave government employees improper benefits.

According to a report in The Wall Street Journal, Pearson did not admit any wrong-doing in the settlement with the New York State Attorney General’s Office, which opened its investigation in 2011 amid reports that the company mixed business with the work of the Pearson Charitable Foundation. The foundation regularly held conferences around the globe. It was accused of  flying in state education officials for trips described by the foundation as educational.

The majority of the settlement, $7.5 million, will go toward 100Kin10, an organization that is trying to place 100,000 highly-qualified math and science teachers in classrooms across America by 2021.

Via a statement, N.Y. Attorney General Eric Schneiderman said that the $7.7 million settlement reaffirms that “nonprofit foundations cannot misuse charitable assets to benefit their affiliated for-profit corporations. 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.”

In an email to employees obtained by The Wall Street Journal, Pearson CEO John Fallon wrote that the company will be reviewing its internal governance practices going forward. “Pearson and the Pearson Foundation have always acted with the best intentions and complied with the law,” he wrote. “However, we realized that there were times when the governance of the Foundation and its relationship with Pearson could have been clearer and more transparent.”