Philanthropy: Beyond the Numbers

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PharmaVOICE Staff

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Pharmaceutical companies — and the industry as a whole — are at the top of many lists in terms of charitable giving, philanthropy, and corporate responsibility. Over the years, pharma has repeatedly been named as a top industry corporate donor, rivaled only by the finance industry. The Reputation Institute, The Chronicle of Philanthropy, The Conference Board, and others have been tracking the industry’s efforts for decades. Ten years ago, pharma was the No. 1 industry in terms of giving back. In 2007, according to a Forbes report, pharmaceutical companies donated 1.51% of their worldwide sales to charity; no other sector at that time gave more than 1%, and many gave less than one-tenth of 1%. Drug companies also topped the charts with their 2007 per-employee giving rate of $5,585 per employee.

Fast forward to 2013, and the industry gave 3.25% of its revenue, with a median total giving per employee of $24,453, according to a report published by CECP, in association with The Conference Board. The median total giving for pharma in 2013, the most recent number available, was  $937.55 million.

The magnitude and variety of the contributions flowing from pharma companies could merit a collective standing ovation. Gilead donated a total of $2.32 billion with almost $500 million of it as cash donations. Pfizer reports it donated more than $3 billion in medicines in 2015, in addition to cash contributions of up to $93 million. Merck made a total $1.82 billion in donations, including $132.54 million in cash donations. Eli Lilly and Company made $560 million total donations, $50 million in cash. Bristol-Myers Squibb reported giving $725 million in total donations, and $27 million in cash.

Not only are the dollar amounts vast, but the plethora of philanthropic endeavors undertaken by the industry is just as mind boggling. From HIV clinics and screenings, to disaster relief, to improving infant mortality, providing access to vaccines and medicines, education, nutrition, and so many other initiatives, the industry is impacting the world in some very positive ways.

But there is a problem. Not enough people are aware of these good works because the industry has traditionally been pretty quiet about them.
Perhaps companies are worried about backlash from industry naysayers who might criticize the amount of money donated or they are worried that a skeptical society might not see the best motivation for its charity. Those are risks, but experts say that the rewards of better communication about its giving can only help raise the industry’s reputation, value, and status in the eyes of consumers who wish to do business with companies that care.

“Pharma could definitely do a better job promoting its philanthropic endeavors,” says Michael Brooks, executive VP, product registration (Americas), PRA Health Sciences. “Many people don’t know that drug companies are among the most generous corporate donors and that much of that giving is in product donations.”

Ken Begasse, CEO of Concentric Health Experience, conducted his own informal polling on the topic of pharma philanthropic messaging. Mr. Begasse asked several people to recall one pharma company’s philanthropic effort.

“They couldn’t do it,” Mr. Begasse says. “Nobody was able to associate any pharma company with a connection to a social cause, but they could rattle off a number of efforts from consumer brands like TOMS, Bath & Body Works, Patagonia, Microsoft, and Starbucks. In my opinion, pharma needs a new playbook on how to self-advocate.”

These brands, such as Patagonia, create awareness by communicating their corporate responsibility across all their messaging. This gives consumers one more reason to be loyal to the product or brand. When people feel good about what the company is doing, they feel good about spending their money on its products or services.

“Case in point, I buy Patagonia,” Mr. Begasse says. “The product is expensive but the company has always had a long-standing commitment to protecting the environment, which is something its core customers thoroughly believe in. The company’s social consciousness has led it to innovate, developing such as bathing suits made 100% from recycled bottles. The company’s sustained clothing philosophy, a commitment to reducing its environmental impact, along with a socially responsible  supply chain, and being an activist in the cleanup of our environmental crisis are what make me feel good about my purchase.”

However, consumers can’t feel good about what they don’t know.

“I once saw an estimate that up to 13% of pharma companies’ U.S. sales are given to nonprofit organizations,” says Ed Mitzen, founder of Fingerpaint. “However, there is little doubt that drug companies are abysmal at promoting their social responsibility. When people complain about the high cost of prescription drugs, there is no mention of all the good manufacturers do to lower healthcare costs and absolutely nothing is discussed about their charity efforts.”

“Reputation and customer perception have long been an issue for pharma, and it is an industry that at its very core helps people,” Mr. Begasse adds. “It’s time pharma takes charge of the narrative.”

And it’s not like the industry doesn’t have anything to brag about. Billions of dollars are flowing to a wide variety of causes. Last year, Gilead earned the No. 1 spot on The Chronicle of Philanthropy’s list for its charitable giving. The rankings are based on a survey of the top 150 U.S. companies in the Fortune 500, as well as on information from public documents filed with the IRS and the SEC. In 2016 alone, Gilead donated almost $460 million to organizations around the world working to improve the lives of people with life-threatening diseases. Gilead was also ranked by The Chronicle as second overall for its commitment to improving patient lives. According to Korab Zuka, director, public affairs, Gilead, the drug maker’s partnership programs are designed to complement the company’s scientific contributions in four key ways: reduce disparities, expand access, advance education, and improve local communities.

Gilead does make an effort to communicate its work with partners, and in 2015, the company published its first annual Corporate Social Responsibility Report on its corporate website. The report was accompanied by three short videos focused on the company’s sustainability, access, and giving efforts and the organization also communicated key performance highlights on social media.

“The pharmaceutical industry is improving its communication about its efforts through corporate social responsibility reports and more and more through digital media, including corporate websites and social media,” Mr. Zuka says. “We are proud of what we have been able to accomplish in this area along with our partners, and we feel it’s important to communicate this great work.”

One way companies can spread the word about their philanthropic work is through their company annual corporate responsibility reports, their dedicated websites, and internal company-related communications.

On the same Chronicle of Philanthropy’s list, Merck ranked No. 12, and third in in-kind giving among organizations that donated more than $1 billion in products and services.

“Through our proactive disclosures and communications, we believe we have an opportunity to inform, as well as increase trust and confidence with all of our stakeholders,” says Brenda Colatrella, executive director, corporate responsibility, Merck. “Included in our reporting are the lessons learned and best practices from our philanthropic initiatives that contribute knowledge to the field and help advance progress in addressing significant global health challenges.”

Merck recognizes that expectations for companies are now higher than ever before, and to be sustainable, the company needs to be innovative and profitable, as well as carry out business objectives in a way that protects the environment, supports communities, respects its employees, and demonstrates ethical behavior.

“Philanthropy is an important component of our commitment to corporate responsibility and also provides a visible demonstration of our efforts to improve access to health and strengthen communities where our employees live and work,” Ms. Colatrella says.

Some communication experts believe the industry could be doing even more in terms of advancing awareness of its charitable initiatives, beyond the corporate reporting sites.

“Ranging from access programs to environmental sustainability to philanthropic donations, matching and other funding, pharmaceutical companies collectively do a lot more, I suspect than the world realizes,” says Wendy Blackburn, executive VP, Intouch Solutions.  “To counteract this, pharma companies must consistently get the word out about all the good they’re doing. This requires clear giving objectives that align with the corporate mission, partnering smart, implementing well, and communicating clearly and consistently.  Above all, their intentions must come from the right place or the public will see right through it.”

Julie Ross, president of Advanced Clinical, believes that the industry should be making a stronger effort to get the results of its good works publicized by using press releases and campaigns to increase the visibility of the positive stories.

“We don’t see anything in the press about the millions of dollars these companies are giving back to their communities and the healthcare industry at large; these efforts need to be marketed so they are visible alongside what the press is picking up naturally,” she says. “Whether it’s through a marketing campaign, or a centralized portal, these efforts need to be made obvious so press and the general public can easily find them.”

The lack of visibility causes a disparity between what pharma actually does in terms of social responsibility and philanthropy and what consumers perceive they do.

“That’s why it’s important that we work to continually improve the two-way dialogue with the public on our initiatives,” Mr. Zuka from Gilead says. “We need to remain transparent and be more vocal about the shared priorities we have with governments, community, academia, healthcare providers, and advocates to collectively address the world’s biggest health challenges.”

Unfortunately, there is a perception among consumers that pharmaceutical companies are only worried about profitability and their own bottomline but the reality is there are many, many companies that give quite generously, Mr. Brooks says.

“Pharma companies partner with many philanthropic organizations on a variety of projects to improve the health and well-being of people around the world, but sadly we don’t always hear about those efforts,” he adds. “Pharma companies need to proactively promote their philanthropic work as part of their overall corporate branding and marketing efforts and look for more ways to partner with charitable organizations that extend beyond traditional giving.”

At Merck, robust reporting and communications efforts create an opportunity to engage with stakeholders.

“We believe it is important for the company to be transparent and authentic in communicating about how it conducts its business in a responsible and sustainable manner,” Ms. Colatrella says. “By using multiple communications channels, targeted to specific audiences, we can help ensure that the company is reaching the right audience with the right message through the right communications vehicle to help raise awareness and understanding of our commitment to corporate responsibility.”

Mr. Mitzen says that creative PR and social campaigns that promote the cause first and the drug company efforts second would do wonders for public perception. In addition, the employees of pharmaceutical firms, who are often incredibly generous, caring individuals, need to do a better job of collectively participating in causes. “Disease awareness events, personal donations at work, and participation on charity boards will all help elevate drug companies’ reputations,” he says.

Creating greater awareness of philanthropic works has benefits both inside and outside the organization. Increasing external awareness can inspire more customer loyalty, but internally, there are benefits too. Companies that make corporate responsibility and charity part of their DNA could experience greater employee morale and retention.

CECP, a coalition of CEOs united in the belief that societal improvement is an essential measure of business performance, conducted a poll and identified employees as the most important stakeholders influencing decisions to expand community investments. In turn, the report said, companies are expanding their socially motivated employee engagement opportunities to offer new ways for employees to participate in company efforts. Companies measured business value of employee volunteerism using employee surveys to include questions about volunteering and job satisfaction. The conclusion is that employee volunteerism is crucial to engaging staff, boosting morale, and improving overall job satisfaction.

“People want to work with companies that give back,” Mr. Mitzen says. “This is especially true of millennials, who not only want to give their business to caring companies, but want to work for them as well.”

At Fingerpaint, the staff is surveyed to identify causes that are important to them. Whether it’s animal shelters, working with kids, helping the homeless, or stocking a food bank, by working with charities that are meaningful to the team, the company ensures long-term commitment to its philanthropic work.

“This ensures that our authentic approach to giving will reflect on our reputation within our communities,” he says.

Philanthropy as a Reputation Builder

Understandably, pharma companies have to be very clear that their charitable giving is solely for the purpose of improving the conditions of the world in which they operate. But once that goal has been determined and the organization begins to develop philanthropic measures, publicizing these good works could possibly help polish the industry’s tarnished reputation.

“Generally, a company does not and should not engage in philanthropy to improve its reputation, however, that is a natural byproduct of doing the right thing,” Ms. Ross explains.  “However, when a company invests to make the world a better place and is giving to those who are less fortunate, it is highly likely that its reputation will grow positively.”

Last year, the Reputation Institute published a report that measured the general public’s perception of the world’s top 14 pharmaceutical companies on the seven key rational dimensions of reputation: products and services, innovation, workplace, governance, citizenship, leadership, and performance. The citizenship dimension is where charitable and philanthropic efforts can improve a company’s reputation.
The Global Pharma RepTrak shows that pharmaceutical companies’ reputations are improving, and that the overall reputation is average with the general public around the world. These results show that the industry is not perceived as badly as many industry insiders think.
These findings should encourage the pharma companies to engage and communicate more, the report says, because the general public wants to know more about the companies behind the drugs, and today 44% to 55% of respondents are uncertain about what pharma companies are doing within the seven dimensions of reputation.

Ms. Colatrella from Merck says she believes corporate philanthropy can be effective in advancing reputation in terms of trustworthiness and respect.

“Philanthropic efforts demonstrate a company’s interest in and commitment to being a good corporate citizen,” she says. “If done well and viewed as sincere, these efforts can help build trust and goodwill among key stakeholders thereby enhancing corporate reputation.”

However, philanthropy alone is not sufficient, she adds. The reputation of a company is more likely to be determined by its broader commitment to corporate responsibility — that is, how it operates and whether it is achieving its business goals in a responsible and sustainable manner.

Increasingly, investors, consumers, employees, policymakers, and other stakeholders are placing more emphasis on social and environmental responsibility in determining their views on a company’s reputation.

“For example, at Merck, the number of inquiries related to environmental, social, and governance issues increased about five-fold in 2016,” Ms. Colatrella says. “Ultimately, a company’s reputation often depends on how key stakeholders perceive different aspects of a company’s behavior and performance. Corporate responsibility and reputation are thus linked as mutually reinforcing or enhancing components of a company’s business value.”

Mr. Begasse thinks this is where many pharma companies fail. Many do support patient communities and further clinical research efforts in underserved populations and impoverished countries with free drugs, care, and money. But does their social consciousness hold up under scrutiny?

“As an industry, we are philanthropic and certainly that is being a good citizen,” he says. “But it’s important to delineate benevolence from social consciousness, and it is here where our industry can do better.”

Organizations that live their purpose have the right to actively communicate and advocate this purpose, as it is authentic and enduring. The long-standing issue at play has been pharma doesn’t put social consciousness at the core of its corporate strategy, and this can no longer continue. In today’s consumer-powered marketplace, it’s noticeable.

“It’s true, pharma companies are appreciated for their contribution to medicine through innovative products but instead of being known for their impact on patients, they’re known for their focus on profits,” Mr. Begasse says. “Putting social responsibility as a linchpin to their organizational vision goes beyond taglines and donations; it must be demonstrated and celebrated.”

Pharma’s philanthropy efforts will never single-handedly solve the industry’s reputation problem, but, done well, these can help chip away at problem areas, Ms. Blackburn says. Additional ways of helping the industry’s reputation include opening up the lines of communication — being accessible, building relationships, and delivering on the promise of patient-centricity. Working hard to make products more affordable and accessible is, of course, critical as well.

“We make a living by what we get, but we make a life by what we give,” says Mr. Brooks, borrowing a quote often attributed to Winston Churchill. “How you give back matters. When a candidate contemplates a career opportunity, or when a potential partner considers collaborating, they want to know what your company stands for and do you put your money where your mouth is. By helping others in meaningful ways you make the fabric of your own organization stronger.” (PV)

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