Another Problematic Corporate Gift: About That GE Money in Boston

Everybody around Boston has been talking about that huge $50 million commitment that General Electric (GE) just made to public schools, health centers, and workforce development around the city. While it's not uncommon for such a large sum to receive its fair share of skepticism, the qualms surfacing here are definitely interesting. 

Lots of interesting corporate philanthropy is happening these days. Often, there's a disquieting "but" in our coverage of big gifts. It's great to see banks investing in low-income communities, but what about all those years of predatory lending? It's nice to see Walmart backing anti-hunger work, but what about how so many of its own workers are on food stamps? It's good that PepsiCo is helping fight childhood obesity, but.... well, you get the point.  

Typically, the caveats we raise relate to the hypocrisy of a corporation spending peanuts on philanthropy to address problems it's profited from creating. You know, like when a cruise line give a five-figure gifts for marine protection even as it saves a fortune by resisting the system upgrades needed to stop polluting the world's seas. 

The GE case raises a different issuewhich is whether a multi-national company is using philanthropy to curry goodwill in a community even as it engages in exploitative behavior. Alas, this is another genre of dubious corporate giving that we've become well acquainted with. 

Before addressing that issue, let's examine the commitment itself, which has obviously has some positive implications for Boston's nonprofit community, as well as the region's economy. 

The public education money will fund college and career opportunities and support STEM high school teachers. Meanwhile, physical and virtual "GE Brilliant Career Labs" will train students in manufacturing technology through externships in the Boston metro area, as well as the Lynn and Falls River communities. And community health funds train providers at 22 community health centers in the Boston area on technology, leadership skills, and increasing access. A significant portion of of GE’s donations to Boston groups comprise in-kind donations for training and equipment, rather than cash.

Here’s how the new GE grant money breaks down:

  • $25 million to Boston Public Schools, divvied up into:
    • $10 million in support of the district's efforts to help build a diverse workforce
    • $15 million to develop the next generation of healthcare workers
  • $15 million to help community health centers in the city develop and enhance the skills of healthcare providers in underserved communities
  • $10 million to boost the capabilities of and outcomes for a diverse student population

We should note that these investments reflect school-to-career strategies that are red-hot right now among corporate funders who are keen to make sure that today's highly diverse student population has the skills to power tomorrow's workforce. So in terms of GE's gift itself, it seems like good stuff. 

"Together GE and Boston will lead the digital transformation of industry," said GE chair and CEO Jeff Immelt. "To build a global digital company and community, we must invest to further educate our children in science and math and improve healthcare in underserved communities. GE’s investments will create thousands of new jobs and support Boston’s regional and economic activities."

Now to the "but."

By now, it’s old news that GE is planning to relocate its headquarters to Boston, so it makes sense to play nice with your new neighbors. In fact, Immelt has said that for every dollar invested in the company's relocation, it will give back to the city "a thousand-fold." One economic impact study determined that GE’s relocation to Boston will generate $776 million in new real estate demand, $28 million for local vendors, 4,000 new jobs, and $260 million in new income.

However, Nonprofit Quarterly’s Ruth McCambridge made some excellent points in her article, “A Highly Suspect Philanthropic Tradeoff for Public Subsidy: GE and Boston.” For one, GE has a long history of minimizing federal tax payments and polluting waterways in Western Massachusetts. To relocate, the company is receiving a $145 million tax incentive from the city of Boston and state of Massachusetts. Meanwhile, Boston Public Schools are facing serious budget cuts, raising questions about whether a GE tax break is the best use for these funds.

People have protested in Boston to oppose the tax incentive. A spokesperson for No Boston 2024 criticized this situation as being a “speculative investment in an outside entity with questionable intentions toward the public budget instead of directly in the things that are needed by the residents that pay the taxes.”

As we've reported elsewhere, some funder-backed work—most notably by the Surdna Foundation—has challenged a model of economic develeopment that hinges on tax breaks for big companies or projects that never really deliver the promised benefits. 

Related: How Surdna Is Pushing to Make Local Economies Work for Everyone

What we can say for sure, here, is that GE has emerged into the Boston philanthropy scene in a big way, which is likely to help its image and mollify some critics. Nice timing, right?

GE already has a presence in Massachusetts, with almost 5,000 employees in the state. But we only expect its corporate and philanthropic presence to grow as the company moves into its temporary location this summer and its final home in 2018.