Spotting the main chance

Scottish philanthropist Sir Ian Wood created a successful business in the oil and gas industry before setting up The Wood Foundation in 2007. As he explains to Alliance editor Charles Keidan, his business and philanthropy are two sides of the same coin. In his philanthropic work in East Africa, where he is known for his pioneering ‘tea philanthropy’, he employs many of the same principles and approaches as he has as a businessman. Philanthropy, he argues, is not just – perhaps not even primarily – about giving money.

What inspired your philanthropy?
In 1960, I went to a very poor black township in Cape Town as part of a scholarship and I spent a week with a doctor who devoted two weeks a month, free, to providing medical services. There was a quarter-mile-long queue waiting to see her and I sat beside her and listened and watched. It completely reoriented my outlook to just how privileged we were in our western world.

I’d gone to South Africa intending to be a doctor, but I met some businesspeople there who had been successful and were able to do things that helped the country. So I pursued a career in business and by the 1990s, we’d become very successful in the oil and gas industry; I was very lucky to be in the right place at the right time.

We’re really trying to help people to help themselves, so we’re not just giving them money. There are some charities doing that and they’re essential, but we’re looking at the economic opportunities for large groups of people and working with them to make them significantly more effective and efficient.

Around that time, we started seriously going overseas to a number of African and South American countries and, particularly in the rural areas, massive poverty and massive inequity were very obvious. In some of the countries which were strong in oil and gas, the people in the country were getting no benefit whatsoever.

Is that when you set up The Wood Foundation?
Yes, in 2007-08. But what I’m doing in philanthropy is exactly the same as I’ve been doing in business. Part of that is putting in time and effort and trying to understand the key problems and causes of inequity and what are the opportunities to overcome it, such as getting good people and putting together a plan. We’re really trying to help people to help themselves, so we’re not just giving them money. There are some charities doing that and they’re essential, but we’re looking at the economic opportunities for large groups of people and working with them to make them significantly more effective and efficient. We did market research and decided East Africa was the best place to be.

We looked at five different agricultural crops and chose tea because there’s a large number of tea farmers in East Africa, a lot of whom weren’t getting anything like a fair deal from the estates that they were selling their tea to. They were following what their fathers and grandfathers had done. They didn’t know what fertilizer was and the yields they were getting were about a third of the yield of the estates that were farming alongside.

Which countries was this in?
Tanzania and Rwanda. We may go into a third country, we’re looking at that just now.

So one of the business principles you adopted was choosing a good team, another was focusing on countries in a particular industry, and the third?
The third is analyzing what’s needed. How do you get farmers who have worked the land for a long time to start using fertilizer, to realize that in a range of ways they can improve the yield and the quality of their tea and therefore get a much better price for it? They just didn’t think that way.

We don’t get involved in politics. We don’t need to. It’s about understanding the culture and reality. You can’t go to a country in Africa and take your British mindset with you. You have to try and understand what’s happening there, what the challenges are and what their mindset is.

Sir Ian in Kigali, Rwanda.

How did you go about that?
First, they didn’t have money to try to improve the situation so we introduced some funding to enable them to buy fertilizer and to do a number of other things that they needed to get better yields, better quality. We bought a couple of factories in Rwanda and we’ve married the factory into the farm, so the farmers can go to the factory, they can see what’s good tea and what’s not good tea. We train about 3,000 farmers a year in farmer field schools, not just in tea. We’re now introducing a business module, because generally they don’t think and plan ahead. It’s a different world. They don’t get up in the morning and plan in a business way, they get up in the morning and say, ‘how am I going to feed my family today?’. It’s very short-term thinking and we’re slowly changing that. They’re now able to buy livestock, they’re able to be sure their kids are well fed and go to school. There’s a whole range of things that we’ve managed to have some impact on.

What we’d like to do in time is hand the operation over to the farmers but we’re not there yet. We’re now planting large amounts of new tea with new farmers. We’ve got two areas of 4,000 hectares each in Southern Rwanda, a very poor area which was hard hit by the genocide. It’s a big investment we’re doing with DFID’s help, which is very important because newly planted tea takes five years to mature so you need patient capital. We put in some funds, as do DFID, and the factory owner has put in some. The Gatsby Charitable Foundation are important partners because they were in Africa long before us and knew the African philanthropic scene. When we put the initial deal together to invest in East African tea production, it was agreed that we’d both equally finance it but we would manage it.

What was the scale of the investment?
I think we said we’d begin with $10 million each but we’ve put a lot more into that since then because it’s grown. The two factories that we’ve bought cost $10 million each.

Buying factories in Rwanda presumably involved the Rwandan government, which is known for good governance and resistance to corruption, but also for limiting human rights and free speech. How did that relationship work?
I can’t comment on the free speech issue, but I will say that the Rwandan government are one of the better, if not best, governments in Africa to deal with. There’s a very clear leadership. They clearly want to significantly improve the livelihood of the rural farming community. We had their backing and agreement for the changes we were making, and we work closely with them and advise them on some things.

Photo credit: Ross Johnston/Newsline Media/TWFA.

So would you say your philanthropy in Africa is unpolitical, but rather seeks to focus on economic development?
We don’t get involved in politics. We don’t need to. It’s about understanding the culture and reality. You can’t go to a country in Africa and take your British mindset with you. You have to try and understand what’s happening there, what the challenges are and what their mindset is. There’s some really good people there and, with encouragement, they’re going to grow and develop their own good businesses in the long term.

Does your highly engaged approach mean you’re a regular visitor to Africa?
I go once a quarter at least and have done over the ten years we’ve been working there. It’s what you would do in business, you go and see what’s happening yourself and ensure it’s going all right. A philanthropist who sends money to a charity in Africa and leaves them to it is taking a massive risk. I’ve got a very good management team on the ground, but it’s helpful for them to see me there.

Coming closer to home, what kind of philanthropic initiatives have you introduced in Scotland?
My part of Scotland, the north-east, has become very dependent on oil and gas. By 2050, we’ll be producing about 10 per cent of our current production. That’s a huge economic challenge and we can’t wait another ten years to say we’ll do something about it, so a number of us have set up a new initiative called Opportunity North East. It’s financed, at present, by The Wood Foundation. We’ve put £29 million in for the first five years, and I’ve just undertaken to provide another £33 million for the second five years.

My nightmare is that the generation or two down the road will look back at my generation and say, ‘you guys really took all the good out of it and look at the legacy you’ve left us’. I think people in the north-east of Scotland are waking up to this.

What will it do?
First of all, paradoxically, it’s trying to ensure that we maximize the oil and gas recovery. We’re also looking at other industries – food, drink, agriculture, life sciences, tourism – and we’ve set up a group on digital entrepreneurship which has been going for one year and is beginning to have some real impact. We’re trying to balance the economy by strengthening the rest of the economy and that’s beginning to work.

Do you see the creation of a balanced economy as a job for government, for entrepreneurs, for philanthropists or a combination of all of them?
It should be a job for government, but they see the north-east of Scotland as a relatively prosperous area and right now, we are. They won’t look ahead 10, 20 or 30 years, so it’s got to be local interests, philanthropic and business, that take the lead. I chair Opportunity North East, and it’s led by the private sector. We’ve got about 80 different people sitting on the boards of five sector groups. This is going to be a whole range of initiatives all contributing to significantly broadening our economy. My nightmare is that the generation or two down the road will look back at my generation and say, ‘you guys really took all the good out of it and look at the legacy you’ve left us’. I think people in the north-east of Scotland are waking up to this.

You’ve mentioned that you felt that your generation had not done as much as it might have done in philanthropy and you hope that the younger generation can do more. Is that a part of your vision for The Wood Foundation?
We want to ensure the next generation is more caring and participative in terms of both their local community and international challenges. I honestly think it’s not that my generation doesn’t care, they just feel they can’t do anything about it and therefore they do nothing. The Youth and Philanthropy Initiative we’ve been running in Scotland for ten years is all about trying to get youngsters to understand that their local community has got problems and that they can do something about it. Small teams of students deliver a presentation on a local charity they’ve investigated and the winner within each school gets £3,000 to give to the charity of their choice. This year, over 31,000 secondary school students have participated. These youngsters are very mature and take it very seriously. At a gathering last year, for example, there were youngsters talking about mental health problems in their family, about the challenges of the gay community and about poverty. They’re getting to grips with these issues and starting to think they can do something about it. And it’s working. As soon as the kids came back with their presentations and told us how they’d been to see the charity and what they’d learned, I knew from their enthusiasm and their interest there was something special here. I think it’s already having some impact on the attitude of the new generation in Scotland.

Do these youngsters see it as philanthropy, or simply as caring for one another?
I think caring is a much better word than philanthropy. You don’t necessarily need to give away a lot of money. Some of the finest philanthropic people I know haven’t given away money, they’ve given their lives. The doctors and nurses I meet in Africa, for example. They’re way ahead of what I do.

Unusually, your foundation has also donated over £10 million to your local hospital to build a car park to serve the whole community.
Of all the things we’ve done, it’s had by far the biggest appreciation from people in Aberdeenshire. A lot of people have to come in from the country to visit or get treatment. Often they were leaving home at six in the morning to try to get there in time to get a parking space at the hospital. There’s stories of people arriving at the hospital and driving round and round and then going back home again. The new car park is free to use. Funding for our public health service being what it is, hospitals don’t have money to put into car parking, so they were very grateful.

You’ve been very successful in business, then gone on to set up The Wood Foundation in 2007. How do you decide how much of your wealth you want to allocate to society and how much to keep for yourself and your family?
I’ve honestly never thought about how much I was worth. I judge what I do by, for example, the two thank you parties the 10,000 farmers gave us in Africa and the number of letters we get from those using the car park. My family don’t want for anything. So right now, I’m giving away a fair bit of the family wealth.

What’s your view of investments? Do you see them simply as a way of generating returns or do you think you have to be careful what sectors or fields to invest in?
Within reason, it’s the first. I don’t have a huge knowledge of investments, so we choose really good investment managers, some of whom are clearly based on what they call sustainable investment. Sometimes when we invest, we will say we don’t want to do this or that, but it’s not a major issue.

As you’ll know, in the philanthropic world there’s been a move towards divestment from fossil fuels, because of climate change. How do you see that as someone whose fortune was made in the oil and gas industries?
The fossil fuel world has changed even since I left it in 2012 and almost everyone acknowledges that we need to change the mix of energy we use. But some 75 per cent of the UK’s energy is currently met by fossil fuels and that will only have dropped to 66 per cent by 2035 because we can’t develop other forms of energy fast enough. The world cannot stop using fossil fuels now, or how does the old lady in her flat in Fife warm herself and have a light to switch on? As well as thinking about tomorrow’s needs, we have to meet today’s because that is what feeds people and keeps them alive. We should take conservation of energy much more seriously because we don’t conserve energy well and that’s a lot of what causes the big fossil fuel demands.

In Africa we’re involved in climate change protection in a range of ways. We’re using solar heating in some places, we’re certainly taking irrigation seriously, because climate change is going to have a bigger impact in Africa, so we’re beginning to plan ahead. Frankly, it’s a luxury to go round with a placard and say ‘no to fossil fuels’. I’m realistic about this. I will subscribe to whatever steps are taken to develop alternative forms of energy but won’t subscribe to something that will result in serious hardship for a lot of people.

Charles Keidan is editor of Alliance magazine
Email charles@alliancemagazine.org Twitter @charleskeidan