Ian Wood is a son of Aberdeen, Scotland’s “Granite City”—an austere outpost on the North Sea that shares a line of latitude with Hudson Bay and the Aleutian Islands. Traditionally a fishing and seagoing town, Aberdeen became wealthy starting in the 1970s after huge oil reserves were discovered in the North Sea.
Born in 1942, Wood prospered alongside these discoveries. His father, John, started a ship repair business and then branched into owning fishing trawlers. After finishing college in 1964, the young Ian aspired toward academia—but agreed to join the family business for a year. “I found I could make things happen,” he later told an interviewer, “and so many things needed to be changed. I was ambitious. I was either going to change things successfully or pursue an academic career.”
Wood was given leadership of the family business in 1967, and he made it into one of Aberdeen’s leading maritime firms. In 1969, North Sea oil was struck, and almost immediately Wood decided that it was too good an opportunity to pass up. He began expanding the business to meet the booming oil and gas industry’s service needs. In 1979, Wood secured one of his first major contracts, an agreement with Shell for engineering services in the Brent oilfield. From there, business boomed. When Sir Ian—knighted in 1994—retired as chairman of the John Wood Group last November, the engineering and oil and gas production support powerhouse employed 43,000 people in over 50 countries and was valued at over £3 billion. Sir Ian’s personal wealth is estimated by the Sunday Times at over £1 billion.
Sir Ian is known for his careful approach to business; he once attributed his relative risk-aversion (relative, at least, compared to other high-flying entrepreneurs) to his “good Scottish streak,” while allowing that “we’ve made two right decisions for every mistake.” He likewise brings a gimlet eye to his philanthropy. Working through the Wood Family Trust since 2007, Sir Ian funds clearly targeted projects in Scotland and Africa. In Tanzania and Rwanda, working alongside Lord David Sainsbury—an heir to the Sainsbury’s grocery fortune—he is seeking to “make markets work” for small-holder tea farmers—a project that already shows signs of improving farmers’ conditions and that Sir Ian anticipates will eventually return the philanthropic capital invested in it. At home, he seeks to cultivate good citizenship, tolerance, and an appreciation for enterprise among Scottish youth, as well as to lay a bedrock foundation for the future prosperity of his hometown.
Sir Ian recently spoke with Philanthropy about his work in Africa, the state of Scottish philanthropy, some philanthropic disappointments, and his plans for the future.
• • •
PHILANTHROPY: How much time do we have with you today?
SIR IAN: I’ve no problem giving away money, but I’ve got a problem giving away time. A half an hour should cover it, hopefully.
PHILANTHROPY: How has your experience as an entrepreneur informed your philanthropic priorities and decisions?
“You have to focus if you’re going to have an impact.”
SIR IAN: The mindset as an entrepreneur—the business mindset—has very much determined our approach to “venture philanthropy.” The other key thing with my business experience is that I traveled a lot in the world and visited some very poor countries providing stark evidence of the inequities and the unbelievable poverty and misery that exist in some of the very poor countries of the world. So it’s not necessarily from being an entrepreneur, but from being a global businessman, that I honed my thinking toward the idea that we really have to try and do something to help people—and I mean, not just less fortunate, but miles, miles worse off than we are.
The business part of my background led me to the concept that we’re not going to just give money away. We’re going to use money and invest it to help people help themselves and try to help develop economic activity and business activity. So, the business is very much inter-related with the philanthropic here.
PHILANTHROPY: And how did you decide on Africa, and about getting involved in the tea industry specifically?
SIR IAN: Africa wasn’t difficult. My company was in the oil and gas business and had a number of activities in Africa. So I had visited a numbers of the countries there. Quite honestly, it could have been India, or it could have been parts of South America, but Africa was the area I felt I knew most about, and you have to focus if you’re going to have an impact. We looked at East Africa, but we didn’t begin with any orientation to work with the tea industry. We began looking at agriculture more generally. After some study, we were lucky to meet some very talented people who knew Africa well, and one of them came on board. With him, we looked at Tanzania, Malawi, Rwanda, and Uganda. We didn’t so much look at Kenya because it is actually pretty well developed compared to the others. We also looked at five or six different farming sectors.
The tea industry came up as having a very large number of small-holder farmers—there are something like 35,000 in Tanzania and 30,000 in Rwanda, and it’s not a well-developed industry. Frankly, it was pretty obvious early on that the very large number of small-holder farmers were dependent on the big tea estates—which really had a monopoly in buying the tea from farmers who were living at or below the breadline in spite of working pretty hard each day on maybe a hectare of tea crop. We looked at coffee and cotton and some others, but tea was the winner.
Since then we have established two tea projects in East Africa in partnership with Lord Sainsbury’s philanthropic vehicle, the Gatsby Foundation. Both projects are over six years and up to $9 million, with a third project added recently, the purchase of the two tea factories in Rwanda.
PHILANTHROPY: How did you apply your venture philanthropy ideas to this initiative?
SIR IAN: We very much go with the local culture. We don’t claim to have a magic formula and say, “We’re from the developed world and can solve all your problems.” We learn about and talk with the local tea industry, understand the challenges within the business faced by the tea farmers (who are the key producers), and find ways to work with them to help and improve their position.
What we learned was that these small-holder farmers have generally got maybe two to three acres of tea planted, alongside what they call their “living crops,” which provide the food for their family. Tea is the cash crop. We set about what we call a value chain approach, in which we say up front “We’re not going to give you money, nor aid. But we are going to work with you, and look at all aspects of your operation beginning with planting the seed, the type of fertilizer you use, the agronomic support you have, your plucking process, and so on—and look right through the various stages in the process until the tea gets to market.”
PHILANTHROPY: Where did you find the best opportunities for improvement?
SIR IAN: We pretty quickly realized that these big tea estates, owned by some of the very big tea players around the world, were the key people who could help the small-holder farmer. They’re sophisticated and knowledgeable on the ground, they buy the tea, and there’s a range of things they could do to help the farmers. So we set up a matching fund with them. They put in some money, and we put in some money for a program to improve the farmer’s yield, improve their transport, improve the irrigation, and improve everything associated with their tea growing. The intention is that the small-holder farmers will become a much more important part of the value chain, commensurate with their role as the primary producer. The tea estates are benefiting from getting the additional product from the higher yield and they are increasingly aligned with the interests of the small-holder farmers. Kenya is a good example of a country that has really thrived, well ahead of the other East African countries in tea, and that’s because most of the ownership of the big tea estates is now in the hands of the small-holder farmers.
We looked at Rwanda, where there were two tea factories still available from the privatization program. In discussions with the government and farmer groups, we developed a long-term plan to help the farmers buy these facilities. That was not the biggest challenge,—the real challenge is in getting the farmers and the cooperatives that represent them into a position where, after a period of time, they will be able to take over the operation of the factory and run it successfully. So we’ve got a long-term agreement with the farmers that will take them into a position from which, over time, they will own and operate the factories. In the intervening period, we need to help enhance their knowledge and capability both in running a tea factory and in governance, which is a major issue. So in time, the farmers will own a more vertically integrated tea business where they are growing, processing, and marketing their own tea.
PHILANTHROPY: I’m intrigued by how your recent tea investments in Rwanda have been structured for you and your philanthropic partners to recoup your capital investment over time. What’s the time scale for recovering that investment, and what do you plan to do with those funds once they’re eventually paid back?
We set about a value chain approach, saying, “We’re not going to give you money, nor aid. But we are going to work with you.”
SIR IAN: The basic idea is that, if this works, this will become a prototype that can be applied in a number of ways, not just to tea farms but to other agribusinesses, and not just in East Africa but possibly elsewhere. The mechanism is very simple. Initially the factories are owned 40–45 percent by the small-holder farmers, with the balance owned by the Wood Family and Gatsby trusts. We’ve provided all the up-front investment, which is about $11 million of capital and $3 million of working capital. The working capital loans will be paid back from the company’s cash flow, and as the investment program builds up, so the cash flow should improve and the available cash surplus will be paid back pro rata to the farmers and to ourselves, with our share over time effectively returning the capital invested. The important thing is that the farmers start benefiting from day one. There is no interest charged on the capital, and when the funds are returned, they will be used by the Wood Family and Gatsby trusts to carry on with additional philanthropic ventures.
PHILANTHROPY: Does that introduce additional accountability and discipline into your philanthropy?
SIR IAN: It’s certainly one way we’ll know we have been successful. The recovery on the tea-factory investment comes only if the tea factory is profitable and working as we hope. This is how we can most effectively give the money and benefit as many people as possible. We are a business family with clear philanthropic intentions of how to help people by applying successful business principles.
PHILANTHROPY: Would you mind if we shifted to speaking about your philanthropy in Scotland? Many of our readers will be unfamiliar with the charitable sector there. How would you describe the overall state of Scottish philanthropy?
SIR IAN: Well, for a country that’s got a caricature of being tight with money, I actually think it’s pretty good. The great shining example we all have is Andrew Carnegie, who came from Dunfermline and used a lot of his funds back home in Scotland. Today, there are maybe eight or nine serious Scottish philanthropists with whom I communicate regularly and compare notes. [Property and retail entrepreneur] Sir Tom Hunter is a good example. [Motorcoach entrepreneur] Ann Gloag is another wonderful example. There are five or six others—and of course J. K. Rowling of Harry Potter fame is a pretty formidable philanthropist.
So there’s a significant level of giving here, but there’s also a huge community of small charities which are run by local, unassuming people, who go about providing care and support services very effectively in their communities. I think Scotland is a caring country and has a very healthy philanthropic community, certainly above average for a country of its size. Of course, it’s nothing like the scale of the U.S., which is outstanding in terms of the number of philanthropists and the amount of money they give away. I’m familiar with some very successful, very effective U.S. philanthropists whom we meet around the world, although they focus more on giving cash and aid as opposed to trying to help create economic activity, employment, and self-sustainability.
PHILANTHROPY: What outcomes are you hoping to get from your philanthropy in Scotland?
SIR IAN: In Scotland, our focus is very much on young people. And it’s focused on citizenship, tolerance and enterprise. I worry across the world that we’re actually becoming less tolerant with national, religious, and ethnic differences. We’ve got to learn to live together. This is actually a much more troubled world than it was when I was young, when it was a straight Cold War between the U.S. and the Soviets with nothing like the level of terrorism and wide-scale unrest that exists right now in so many countries across the world.
Scotland is a caring country and has a very healthy philanthropic community, certainly above average for a country of its size.
Citizenship is about trying to give youth a sense of their responsibility not just for themselves and their families but for the wider communities that they live in. So we have a program called the Youth and Philanthropy Initiative. It wasn’t our concept. It was conceived by a lady named Julie Toskan-Casale, who is the founder of MAC Cosmetics in Canada. We agreed to implement the process in Scotland. Pupils at school in their teenage years, in groups of three or four, choose a charity, then go visit it and come to understand what it’s trying to do and what its problems and challenges are. They come back and present on it in a competition, and the winner gets $5,000 to give to the charity. The good news is that in Scotland there are now, this year, 81 small charities who have $5,000 because of these kids. But that’s secondary. Much more important is that these young people, many of them for the first time in their lives, understand that their community isn’t just the comfort of the family and the family home, but that actually there are a lot of problems out there where they can make a difference. It changes their behavior and attitude, and that’s a very rewarding outcome.
Enterprise is the other focus we have, where we support programs trying to encourage young people to grasp the principles of business and to find employment.
PHILANTHROPY: And what about your other big project in Scotland—the Aberdeen City Garden?
SIR IAN: I think the headline on that is “Extremely Frustrating.” I was born in Aberdeen. My grandfather was a fisherman. My father had a very small business here. North Sea oil came along and when I retired in November 2012, the company I started had 43,000 employees in 50 countries around the world. But with oil and gas a depleting resource, I have concern about what happens to Aberdeen in the medium to long term. Aberdeen now is very dependent on oil and gas—on one business, and I’ve said for some time that Aberdeen must diversify and attract new industries. One current negative is that Aberdeen does not have the most attractive city center. It’s been run down for quite a long period of time. When I was young boy, Union Street was a real attraction, one of the best shopping areas in Scotland with everyone proud of it, but now I’m afraid it’s towards the other end of the scale.
I therefore offered $75 million to the City Council to be used to transform the center of the city and create major new city gardens, two small city-center squares, a cultural center, an auditorium and an area where the citizens can gather away from the inclement weather, with a key feature being the beautiful gardens at street level to enhance the experience. This was to replace a sunken Victorian garden—the Union Terrace Gardens—that’s badly run down and not really used at all, and also cover over an unsightly roadway and railway situated below street level. One problem was that the project became political and caught up in a disagreement between the Scottish National Party and the Labour Party. It was approved by the council in 2010, and again approved in a citywide referendum in early 2012. However, in the middle of last year the Labour Party gained control of the city council and voted the project down. It’s not quite yet dead, but if the project doesn’t get the go-ahead by the summer, the Wood Family Trust will apply its funds elsewhere.
PHILANTHROPY: What was the political objection to the project?
SIR IAN: I honestly can’t give you a good answer to that. I don’t think its opponents liked the notion that it had been conceived by big business—and even that’s not true. This project had been under discussion for a long time but failed to proceed for lack of funds. All I did was to offer funds to help make it happen.
It’s true that half of the money (about $105 million) had to come from public funds, but the national government came up with a scheme, which applies across Scotland, that would have resulted in the Aberdeen development not costing the local taxpayer a penny in terms of local taxes and with effectively no risk to the council with the special government loan made available, repaid over a period of time from enhanced business tax receipts arising from the increase in activity.
So yes, I am very frustrated, as are most of the citizens in Aberdeen. The big worry is that in 20 or 30 years’ time, the oil and gas industry will begin to deplete, and Aberdeen will need to attract new business and new opportunities. The infrastructure investment for these should take place now, and the transformational city center project would have made Aberdeen a much more attractive city for people to come and invest in.
PHILANTHROPY: I want to be respectful of your time, so, just one more set of questions. Do you plan for the Wood Family Trust to remain in perpetual existence? And how are you structuring it and involving family members to ensure that your goals remain at the heart of what it’s doing?
SIR IAN: When we started in 2007, the intention was to put in $75 million, and I saw that lasting for 10 years, which was a period I felt I could be quite active in the philanthropic venture. My youngest son, Garreth, became involved right at the beginning. He is 34 and has always been interested in charities, and is a very active trustee. I have another trustee, a close colleague, who oversees the various family financial activities.
We’ve since put in further funds, and Wood Family Trust now has about $175 million available. So I see a longer life for the trust, with part of my responsibility now being the management and trusteeship succession, which I will oversee over a period of time.
When we started, we had a firm conviction that the family trust was the right thing to do. I wasn’t at all sure how it would go, particularly the African investments. We’ve now built up a really good management team with good business knowledge and growing specialist knowledge of the tea industry in Africa, and I can now see more clearly down the road. We’ll work hard to make the Rwandan tea factory acquisitions a success for the small-holder tea farmers, and this undoubtedly has a lot of potential elsewhere. However, it’s Africa—with all the challenges and uncertainties—and there are still lots of things that could go wrong.
It’s far too early to claim any kind of success, but with the team we now have, we can see the way ahead—and a great deal of potential to make a real difference to the lives of some very needy people.