Sylvan Learning Systems Inc. said yesterday that it is establishing a nonprofit foundation, with initial assets of $7 million, to support quality education and training projects.
Based in Baltimore, Sylvan is one of the nation's largest providers of educational services and one of the fastest-growing tutoring and testing companies.
The foundation's goals dovetail with Sylvan's corporate mission, but the company said it previously had been unable to establish such a foundation "because of the obligation to maximize shareholder value."
But a recent financial windfall -- a $30 million breakup fee associated with the termination of Sylvan's agreement to acquire National Education Corp. -- provided the company with "the perfect opportunity," said Douglas L. Becker, Sylvan president and co-chief executive.
The $30 million will more than offset the $7 million charge against earnings that Sylvan will take for transferring stock to the foundation, he said.
The move cheered those in the nonprofit sector who fear that recent acquisitions of major Baltimore corporations by out-of-state companies may reduce their local philanthropy.
"It's wonderful news to hear that a local company is establishing a sizable charitable foundation even as corporations are leaving the city," said Peter Berns, executive director of the Maryland Association of Non-Profit Organizations, which represents 685 groups throughout the state.
While the new nonprofit, to be called the Sylvan Learning Foundation, will award grants nationwide for such projects as teacher training, it is expected to focus heavily on Baltimore, where it will be based, and Maryland.
"It's meant to be a national foundation, but there's no question we will actively seek opportunities to support Baltimore and Maryland before we look anywhere else," Becker said.
From the beginning, the foundation will be comparable in size to those operated by much larger Baltimore-based companies, including T. Rowe Price Associates Foundation Inc., which had $6.4 million in assets for fiscal 1994, and the USF&G Foundation Inc., which had $9.5 million in assets during the same period, according to the Association of Baltimore Area Grantmakers.
"This is a good start, but ultimately we hope the foundation will give away millions of dollars every year and become a major force in encouraging educational reform in the United States," Becker said.
The foundation will have initial assets consisting of Sylvan stock currently valued at $7 million. "But if the stock performs the way it has in the past, the foundation could end up with a substantially greater amount of assets," Becker said.
In 1993, Sylvan went public with a $6-a-share offering. The stock is now trading at $36 a share.
Becker said Sylvan also donates more than $1 million a year to various nonprofit groups, including Port Discovery, Baltimore's children's museum.
Through a board of directors, the foundation will make grants to nonprofit organizations. It will not accept unsolicited applications.
"We're looking for promising projects and, through our work in the communities, we can readily identify many," Becker said.
Sylvan serves more than 10,000 students through contracts with public school districts and provides computer-based testing for academic admissions, professional licensing and certification. It has a network of more than 650 Sylvan Learning Centers that provide individualized instruction.
In February, Sylvan moved from Columbia and opened its international headquarters in Baltimore's Empowerment Zone. It became the first major public corporation to move to the center city in two decades and was one of the first large companies in the United States to relocate to a federal empowerment zone.
Pub Date: 6/05/97