THE Northern Rock Foundation - the region's largest independent grant-making body - is to close after talks with Virgin Money over future funding came to an end without an agreement.
The Foundation, which aims to tackle disadvantage and improve the quality of life in the North-East and Cumbria, was established when Northern Rock Building Society demutualised in 1997.
A statement released by the Foundation this afternoon said: "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 between us.
"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, and always has been, 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."
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.”
Up to 2007 Northern Rock covenanted five per cent of its pre-tax profits annually to the Foundation.
From 2008 to 2010 Northern Rock Foundation received £15m per year as part of the arrangement under which Northern Rock was taken into temporary public ownership.
From January 2011 the Foundation was supported by Northern Rock plc through a funding agreement to provide one per cent of pre-tax profits.
As part of the sale of Northern Rock plc to Virgin Money, which completed on January 1, 2012, it was confirmed that Virgin Money would extend the commitment, in respect of the Northern Rock business, until the end of 2013.
Virgin Money donated £500,000 in April 2013. A further donation of £1m from Virgin Money was announced in March this year.
This money will be used to fund Northern Rock Foundation’s current grant programmes, which were already planned to include this donation.
It expects to spend almost £7m in 2014 on grant programmes and other projects to support charities and voluntary organisations.