The GED Goes For-Profit

July 31, 2013 Posted by Jessica Shofler in News

For more than 70 years, 501(c)(3) American Council on Education (ACE) has administered the General Educational Development Test (GED), used by many to get a high school diploma. That is about to change.

Starting in JaGEDnuary, the GED will be run by for-profit company GED Testing Service, a joint venture of ACE and Pearson, one of the world’s largest for-profit education and testing companies.

ACE explains that this change is necessary to help the GED remain relevant. ACE leaders believe the GED must more accurately measure an individual’s readiness for the next steps in his or her career or education. But ACE doesn’t have the money or expertise to accomplish this goal on its own. According to ACE, before agreeing to the joint venture it approached several nonprofit testing companies, but none were interested.

Responses to the impending change are not all positive. A few states have already dropped the GED in light of the new test.

Pasadena public radio station KPCC reports that this type of for-profit involvement in education is a growing trend. According to the article, 30% of the world’s education industry is now run by private companies. This is something we’ve dealt with directly. We’ve  converted nonprofit educational institutions to for-profits – and for-profits to nonprofits.

If your nonprofit is considering entering into a joint venture or other arrangement with a for-profit entity or is thinking about converting from a nonprofit to a for-profit or vice versa, contact us first. These relationships are highly scrutinized by the IRS and can affect your organization’s exempt status if not done properly. We’ve done it before and know all the pitfalls to avoid.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits, 4705 Laurel Canyon Blvd, #306, Studio City, CA 91607

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