Scorecard:
ACT Inc

500 ACT Drive
Iowa City, IA 52243

https://www.act.org/

Grade: D


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.


Facts and Figures

Profit (Gross): $23 million

  • 3.8% of Revenue
  • Profits are 139% of the industry average

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CEO Compensation: $734,538

  • CEO Richard L. Ferguson is earning 978% of the industry average

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Trustee Compensation (Avg): $40,577

  • Total of 13 trustees/board members; 12 are paid
  • In violation of IRS guidelines

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Political Lobbying Expenses: $130,082

  • ACT 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."

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Specific Areas of Misconduct by ACT

Common Midconduct in the Industry

  1. Exorbitant Officer CompensationRichard Ferguson is being compensated a total of $734,538 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). ACT Inc's 11 executives are being compensated an average of $310,988 per year. These salaries are far too high for a non-profit company.Learn more about the Big 3's exorbitant executive compensation.
  2. Paying DirectorsACT is paying its Board of Directors a total of $496,500 per year - an average of $38,192 per Director. The vast majority of non-profit companies don't pay their Directors, the Directors are willing to volunteer their time for a good cause. In fact, the IRS specifically advises that directors not be paid. Learn more about the Big 3's inappropriate pay for its governing board members.
  3. Selling Test Preparation MaterialsIt 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.
  4. Unacceptable Political ManipulationACT Inc spent more than $130,082 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.
  5. Massive ProfitsA gross profit figure of 3.8% would be respectable for most for-profit companies. 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.

Financial Records (pdf)

Ongoing News, Complaints and Criticism

College Board Leader Paid More Than Harvard’s

From Bloomberg: The president of the College Board, the nonprofit owner of the SAT entrance exam, has seen his compensation triple since 1999 and now gets more than the head of the American Red Cross, which has more than five … More..

IRS Investigation of Test-Maker Pay Sought

From FairTest: The Attorney General of Iowa has asked the U.S. Internal Revenue Service (IRS) to investigate the high fees ACT Inc., a non-profit corporation, pays its board members and officers. The test development and education research firm is based … More..

ACT Inc. Board, CEO Paid Higher Than Most Nonprofits

From Diverse Education: The Iowa City-based nonprofit organization that develops ACT college entrance tests pays its board and its top executive more than almost all other nonprofit organizations in the United States. ACT Inc. pays its 14-member board of directors … More..

Nonprofit ACT board’s pay near top in U.S.

From the Des Moines Register: More than $1.2 million in fees paid every year by students, school districts, states and others to ACT Inc. of Iowa City is profiting the nonprofit company’s board of directors, a Des Moines Sunday Register … More..