UK’s Northern Rock Foundation to close as Virgin Money cuts off funding

 

Alliance magazine

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Alliance magazine

Alliance magazine

Discussions between Northern Rock Foundation and Virgin Money over the past year have now ended. The foundation hoped to agree with Virgin Money a viable long-term solution to secure the foundation’s future. Following wide-ranging discussions it is now confirmed that Virgin Money cannot commit funding to ensure this, and will not continue the previous funding agreement with Northern Rock Foundation.

Ideas for partnership working were also discussed and a limited number were eventually selected by Virgin Money, to be jointly funded, but none of the proposals included any funding for the foundation itself. Northern Rock Foundation’s mission is to target its funds to areas of work where there is a significant social need and a lack of resources. After careful consideration the foundation’s trustees felt these ideas either duplicated the work of others or weren’t aimed at priority areas of need, and therefore were not the best use of the foundation’s funds.

The foundation’s closure is now inevitable, as it receives no income from any other source. Trustees will begin to implement a plan for an orderly wind down. The current grant programmes are already due to close at the end of 2014, and trustees will make further announcements later this year about the use of the foundation’s remaining funds.

Northern Rock Foundation was established when Northern Rock Building Society demutualized in 1997. Up to 2007 Northern Rock covenanted 5% of its pre-tax profits annually to the foundation. From 2008 to 2010 the foundation received £15 million per year as part of the arrangement under which Northern Rock was taken into temporary public ownership. From January 2011 Northern Rock agreed to give the foundation 1 per cent of pre-tax profits.

As part of the sale of Northern Rock plc to Virgin Money in January 2012, it was confirmed that Virgin Money would extend this commitment until the end of 2013.
Virgin Money donated £500,000 in April 2013, and a further £1million in March 2014, to fund the foundation’s current grant programmes.

Click here to read the press release>
Click here to read a report from Civil Society Media>


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