Northern Rock Foundation has announced that it will close, after discussions with Virgin Money did not produce a commitment to continue funding the Foundation and its work. Virgin Money took over the Northern Rock bank following its nationalisation in 2012 following the financial crisis of 2008.
The Foundation used to receive 5% of pre-tax profits from the bank. When Northern Rock was nationalised in 2008, the Government committed to provide funding of £15 million each year from 2008 – 2010. Following the split of the bank at the start of 2010, the new bank created (Northern Rock), which was still in Government ownership, agreed with the Foundation to provide 1% of pre-tax profits on an annual rolling basis.
When Virgin Money acquired Northern Rock at the start of 2012, it extended that existing commitment to provide 1% of profits until the end of 2013, to allow time for Virgin Money and the Foundation to agree how they could work together in the future.
Virgin Money donated £500k to the Foundation in 2013, and a further £1 million in 2014.
For the past 16 years, the Northern Rock Foundation has made grants to organisations which help people who are vulnerable, disadvantaged, homeless, living in poverty or are victims of crime or discrimination.
Ideas for partnership working were discussed but none included any funding for the Foundation itself. The trustees viewed the proposals on offer as either duplicating the work of other organisations or not targeting priority areas of need.
The Foundation’s closure is now inevitable, it announced in a statement yesterday. It receives no income from any other source.
The current £7 million grant programmes will run as planned to the end of 2014. The trustees will announce later this year how they plan to allocate the Foundation’s remaining funds.
Alastair Balls, Chairman of the Foundation said:
“It is very disappointing after such extensive discussions to have to accept that Virgin Money will not commit to fund the Foundation in future. Trustees are keen to ensure that our remaining funds are used to achieve significant benefit in the North East and Cumbria and we will announce our plans later this year.”
Jo Barnett, Head of Social Enterprise at Virgin Money commented:
“The Northern Rock Foundation has contributed to some fantastic work here in the North East and Cumbrian regions for many years and we have been proud to support them with £1.5 million of donations over the last two years. We have tried hard to find a way to continue working together on programmes that would deliver significant benefit to the region, however we have not been able to agree a way forward.”