This site describes the efforts of American students and other test-takers to encourage major educational testing companies to act with greater integrity and fairness. Most of these companies are considered non-profit organizations and have been granted special tax-exempt status by the IRS. They can - and should - be held to a higher standard of corporate responsibility. Founded on principles of corporate ethics and responsibility, AETR is dedicated to making sure every American test-taker is treated fairly by their testing company. Lend your support by taking a few seconds to sign our online petition.

 
Home     Recent News     We Deserve Fairness     Abusing their Responsibility     The AETR Petition     Contact
Big Profits     Exorbitant CEO Compensation     Paid Governing Boards     Test Prep Sales     Political Lobbying     And more...

AETR REPORT CARD

ACT Inc                Grade: D

500 ACT Drive
Iowa City, IA 52243-0168

Contact ACT Inc at http://act.org/contacts/general.html

 

Introduction

ACT has so flagrantly abused the spirit of its supposedly non-profit mission that its status has come under investigation. The Iowa state Attorney General has recommended to the IRS that ACT Inc's non-profit status be reviewed in light of the overcompensation of its CEO and Board of Directors.

 

Mission Statement AETR is in no way affiliated with ACT Inc or any of its subsidiaries.

"Helping people achieve education and workplace success."
   - From "About ACT"

 

Facts and Figures *

Profit (Gross)  $38.3 million   • 16.2% of Revenue   (Revenue of $236.8 million; Expenses of $198.5 million)
  • Profits are 235% of the industry average
CEO Compensation  $630,918   • Mr. Richard L. Ferguson
  • Earning 16.5 times the industry average
Trustee Compensation (Avg)  $32,600   • Total of fifteen trustees/board members; Fourteen are paid
  • Earning more than 326 times the industry average)
Political Lobbying  $152,310   • ACT Inc incurred these expenses while it "attempted to influence national, state, or local legislation, includ[ing] any attempt to influence public opinion on a legislative matter or referendum."

* Facts and figures are based on the ACT Inc tax filing (IRS Form 990) from 2007, the most recent records available. This document and other financial records are available for download below.

 

Specific Areas of Misconduct by ACT Inc

Common in the Industry

1) PROFITS.   A gross profit figure of 16.2% would be absolutely oustanding for a for-profit company. A non-profit company posting these kinds of profits is unacceptable. ACT either needs to charge less for its exams and other services, or relinquish its non-profit status.  Learn more about the Big 3's big profits.

2) EXORBITANT OFFICER COMPENSATION.   Richard Ferguson is being compensated a total of $630,918 per year. "Ferguson's base salary [alone] surpasses the $450,000 paid to the head of United Way of America, the country's largest nonprofit in 2006, as well as that of President Bush, who makes a base salary of $400,000. The average CEO salary for a similar company of the same size is $325,106, according to an analysis by Jim Brennan, a senior analyst at ERI Economic Research Institute" (Des Moines Register, 11 Nov 2007). Thomas Goedken, ACT's CFO, is being compensated over $304 thousand annually. The top five Vice Presidents are paid an average of $277 thousand per year. These salaries are far too high for a non-profit company.  Learn more about the Big 3's exorbitant executive compensation.

3) PAYING DIRECTORS.   ACT is paying its Board of Directors a total of $489 thousand a year - an average of $32,600 per Director. (To his credit, Mr. Carl A Cohn stands as the sole Director that does not accept compensation from ACT.) The vast majority of non-profit companies don't pay their Directors, the Directors are willing to volunteer their time for a good cause. Paying Directors at all is suspicious, but at these rates it is an outrage.  Learn more about the Big 3's inappropriate pay for its governing board members.

4) SELLING TEST PREPARATION MATERIALS.   It is unethical for a testing company to sell test prep materials (see ACT Inc's official "ACT Test Prep" webpage) because it is morally and legally obligated to treat all test-takers fairly. Selling test materials only gives an advantage to wealthier students - ACT Inc should leave test preparation to unrelated for-profit companies.  Learn more about the Big 3's unethical sales of prep materials.

5) UNACCEPTABLE POLITICAL MANIPULATION.   ACT Inc spent more than $152,000 in 2007 on "direct" lobbying. This money was used to influence your legislators and government officials to adopt, and even require, ACT Inc tests for various educational and professional purposes. A company is given non-profit status in order to serve the public interest, not to covertly manipulate legislators in order to expand its monopoly position. ACT Inc needs to reign in its inappropriate manipulations of our government.  Learn more about how the Big 3 manipulate politics.

 

Criticism From Other Sources

•  FairTest.Org
"College Admissions Testing: The Real Beneficiaries." (Oct 2001)
http://www.fairtest.org/college-admissions-testing-real-beneficiaries

•  The Des Moines Register
"Nonprofit ACT board's pay near top in U.S." By Lee Rood (11 Nov 2007)
http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20071111/NEWS10/711110330/-1/archive

•  Diverse Education
"ACT Inc. Board, CEO Paid Higher Than Most Nonprofits." Associated Press (12 Nov 2007)
http://www.diverseeducation.com/artman/publish/article_10144.shtml

•  FairTest.Org
"IRS Investigation of Test-Maker Pay Sought." (Jan 2008)
http://www.fairtest.org/irs-investigation-testmaker-pay-sought

 

Finacial Records (PDF Format)

• IRS Form 990 (2005)

• IRS Form 990 (2006)

• IRS Form 990 (2007)


Back to top

Demanding ethics and accountability in the American standardized testing industry.
©2010 AETR.org. Americans for Educational Testing Reform. All Rights Reserved. Custom design by Avalanche Digital Design.