SCHENECTADY — Along with the reduced buying power many embattled GE stockholders feel, their giving power may be shrinking.
Many non-profit entities and philanthropic organizations in the Schenectady region benefit from the generosity of General Electric and its employees and retirees. GE, in fact, matches donations from employees up to a point, doubling their impact.
So, as the massive company struggles financially and its stock value languishes, some observers expect a ripple effect.
Also
- GE stock on the rocks: Its continuing decline and impact on local investors, Dec. 9, 2018
- From blue chip to cow chip: The steep and brutal decline of GE stock, Dec. 9, 2018
“That’s a huge impact, I think, for any of the organizations,” said Cathy Lewis, a Schenectady Board of Education member, GE retiree and GE investor. “In this area, there are a lot that receive matching gifts. I really think its impact will be felt. I say that because I sit on a number of the boards [of non-profits].”
An area businessman who is involved in no fewer than eight community organizations but asked not to be identified by name said he’s seen some negative impact at each of the entities with which he is involved.
Just how much wealth is held by Capital Region residents in the form of GE stock is hard to say.
Wallace Altes, a former Albany-Colonie Chamber of Commerce president and longtime business leader, said putting a figure on that may well be impossible.
“That was a question I started asking 20 years ago, and nobody would ever answer it,” he said last month, laughing. “I wanted to know how many GE millionaires were in this area. It’s a terrific question, and I don’t know where to get the answer.”
A COOL MILLION
The “GE Millionaire” is a creature of now-mythic stature, given the company’s share price history. It was a rank-and-file man or woman who worked decades at GE, earning a decent but not huge salary and buying company stock every year, with a matching contribution by GE itself.
With reinvestment of dividends, and with the huge run-up in share values during Jack Welch’s 1981-2001 tenure as CEO, a GE employee could accumulate some real wealth through stock ownership.
A cool million, perhaps.
Roger Hull, then president of Union College, recalls his own encounter with a GE Millionaire 20 years ago, when Union was working to convert the old Alps Grill on Nott Street into a community center. Marjorie Kenney donated $1 million toward the effort. Her late husband, Ralph, was a GE worker who’d bought $25 worth of GE stock each month and let it appreciate through dividends and multiply through splits.
“As a result, she was in a position to make this magnificent gift to Union,” Hull said. “That’s the example that I can cite of someone who had become wealthy as a result of the stock and consistent investing in it. It was stunning for me, and she was so happy to be able to do it.”
Today, the Ralph and Marjorie Kenney Center serves as Union College’s headquarters for community outreach and for all student volunteer programs.
Also
- GE stock on the rocks: Its continuing decline and impact on local investors, Dec. 9, 2018
- From blue chip to cow chip: The steep and brutal decline of GE stock, Dec. 9, 2018
“My feelings are that this was a city that had a lot of hidden millionaires because of GE,” Hull said, “and obviously, the stock is now trading at roughly one-sixth of what it was trading at its high, and that cannot be helpful to the nonprofits in the city.”
Like Altes, though, Hull has no way to quantify his assumption.
LONGTIME BENEFACTOR
The City Mission of Schenectady, at 112 years old, has been operating in the Electric City nearly as long as General Electric has existed. GE and its employees have long been a source of support and money for the City Mission, but Executive Director Michael Saccoccio says the company’s current struggles will likely be reflected in reduced donations to it and other area nonprofits.
“There’s no question it’s being seen, and I’ll know more after this holiday season,” he said.
“A number of donors give a set number of shares each year,” Saccocio said. “These are people who, this is what their wealth is.”
It’s a good strategy, he said, allowing the donor to simultaneously do good and avoid a capital gains tax, but the Mission’s policy is to sell all non-cash donations promptly. So it doesn’t have the option to hold onto GE stock until it bounces back.
Meanwhile, the GE Foundation, General Electric’s philanthropic wing, has reduced the maximum employee donation it will match to $5,000, Saccocio noted.
“At a place like the City Mission, people are still generous; they’re sacrificially generous, but they’ll say: I can’t get the gift match. It’s clearly going to hit us.”
He added: “It’s not a complaint. I am nothing but grateful for General Electric and the GE Foundation and what they’ve done over the years. It’s amazing.”
For the United Way of the Greater Capital Region, GE and its employees have consistently been the biggest source of donations annually, and its president, Peter Gannon, said that continues today.
“We’re in the middle of our campaign season, so it’s really early to tell,” he said. “I look at GE’s community involvement and I don’t notice any difference. I don’t think I go to an event in the Capital Region where I don’t see GE there in some fashion.”
As for the individual GE stockholder? Gannon, like others, struggles to quantify the impact of the stock’s decline.
“It’s a hard question,” he said. “There isn’t anything trending that is alarming to me, aside from typical trends we are seeing in workforce campaigns. There isn’t anything that has stood out for me.”
REGION IS STRONG
Proctors CEO Philip Morris said his performing arts center (which stands a half-mile from GE Schenectady’s front gate), has seen changes — but not harmful ones.
“I think some of it is just plain obvious — the company itself has reduced its matching gifts, so it doesn’t incent people to give at the same level,” Morris said.
Harder to quantify is whether GE employees and retirees are buying fewer tickets and subscriptions.
“We don’t know where everybody was employed; we have no way of knowing that,” Morris said. “But we did look at three ZIP codes that have a lot of GE people.”
There was a small but unmistakable decline in tickets sold to residents of those ZIP codes in 2016, compared with 2014 and 2015, Morris said.
“Did it crush us? No, and that’s part of the story, too. GE is a piece of the community, not THE community, as it was 40 years ago, 50 years ago,” he said.
“When it shudders, the shudders are felt. But we’re a regional enterprise. The region as a whole has absorbed those [companies] that are doing less well, because the economy is doing well.”
Categories: -News-, Business, Schenectady County
