The Northern Rock Foundation is preparing to wind up after an offer of funding from Virgin Money fell through because the charity cannot raise the £3m-a-year match funding that offer needs.
In April the foundation announced that closure was “inevitable” after failing to come to a funding agreement with Virgin Money, the new owner of the Northern Rock bank. But in May Virgin Money offered the charity £1m a year for five years if it the charity could raise £3m a year from other businesses in the region.
In a statement this morning the Northern Rock Foundation’s trustees said that they did not think it was possible to raise the £3m needed and will now close current grant programmes at the end of 2014.
“Virgin Money and Northern Rock Foundation together looked at many different ways in which this offer could help to generate an income for the Foundation including reviewing the current funding environment and canvassing views from private, public and voluntary sector bodies," the statement said.
“Eventually it was concluded that, given the existing charitable commitments and links with other local funders of many other businesses in the region, this was not a viable option for the foundation."
It said trustees "would be open to viable approaches” but have set about scaling down the foundation’s work.
The statement added that: “The foundation’s remaining funds will be used to achieve long term positive impact on the lives of children and young people in the region, and also to support the development and sustainability of voluntary organisations.”
Exact details of the final plans will be decided in the next few months, but the foundation has already decided that will support the establishment of a Youth Zone in the north east.
The foundation was established in 1997 when the Northern Rock Building Society demutualised and became a bank. Until the bank collapsed in 2007 it donated 5 per cent of its pre-tax profit to the Foundation. Between 2008 and 2010, while the bank was under public ownership, the Foundation received £15m per year.
As part of the sale of Northern Rock Plc to Virgin Money in 2011 the new owner agreed to donate 1 per cent of the bank’s pre-tax profits to the Foundation until the end of 2013.
Accounts filed with the Charity Commission show that for the financial years ending December 2011 and December 2012 the foundation had an income of less than £500,000. The three previous years its income had been more than £15m.
Earlier this year Virgin Money’s chief executive, Jayne-Anne Gadhia said: "We simply cannot support the £4m requirement of the Northern Rock Foundation on our own.” The aim of the matched funding offer was for the “legacy of the Northern Rock Foundation to be one shared with the North East business community”.
