Richard Branson says Northern Rock Foundation should launch fundraising drive to secure survival

The Northern Echo: Sir Richard Branson meets pupils from West Jesmond Primary School in Newcastle taking part in Virgin Money’s Fiver Challenge, which gives young entrepreneurs a chance to start their own business with a £5 loan. All profits are retained by the school. Sir Richard Branson meets pupils from West Jesmond Primary School in Newcastle taking part in Virgin Money’s Fiver Challenge, which gives young entrepreneurs a chance to start their own business with a £5 loan. All profits are retained by the school.

THE WORLD’S best known businessman has urged the North-East’s biggest charity to secure its future with donations from local companies. Business Editor Andy Richardson spoke to Sir Richard Branson about his rescue plan for the Northern Rock Foundation.

SIR Richard Branson is prepared to give £1m a year for North-East good causes if a new bid to save the Northern Rock Foundation fails.

The Virgin magnate said during a visit to the North-East that the foundation could safeguard its future by launching a fundraising drive to secure donations from the 11 regional businesses that are larger than Newcastle-based Virgin Money.

The foundation has handed about £215m to good causes across the region in the past 16 years, but there are fears that some of the charities and organisations it funds will fold without its ongoing support. 

Virgin Money has offered to pay the foundation, which it inherited as part of its buy-out deal for the failed Northern Rock bank, only a quarter of the £4m-per-year it needs to continue supporting good causes. The deal would run for the next five years.

Sir Richard said the people running the region’s biggest charity “have to get off their a*** and prove themselves” by getting the likes of Nissan, Greggs and Northumbrian Water to make up the £3m shortfall.

He also questioned if the foundation could be run with fewer staff, and suggested it dip into the £20m it holds in deposits.

The Northern Echo understands that the foundation holds about half of that amount in its coffers, and staff numbers have slimmed down considerably in recent years to 13 people.

Three of the region’s largest firms: Nissan, Northumbrian Water and Vertu Motors said that they ran well-established charity programmes of their own and had no plans to redirect funds to the Northern Rock Foundation, while SSI UK, the region’s 10th largest firm, said its priority was to establish itself as a competitive business in the global steel industry.    

Jayne Anne Gadhia, Virgin Money chief executive, confirmed that the offer was inspired by comments made by Labour leader Ed Miliband, who suggested during a visit to the North-East on Friday that big companies should back their local communities. 

Ms Gadhia, said: “Being honest the thought wouldn’t have occurred to me without the provocation from Miliband. I thought his comments were strong, but fair, sensible and a deliverable proposal for the foundation and for the North-East.”

Asked if pressure from local MPs and Mr Miliband had shamed Virgin into making the offer, Ms Gadhia replied: “We have been looking for a solution to unlock this for the last two years. Ed’s comments created a new idea.

"Do we feel ashamed? Absolutely not. The work we do already to support charities in the North-East and across the UK is considerable.

“Since the financial crisis started seven or so years ago the world has changed. All of us have to change to be right with the new times. As yet the Northern Rock Foundation haven’t found a way to be right for the new times.”  

Sir Richard added: “The Northern Rock Foundation has got quite a big team of people working on it so has quite a lot of overheads.

“They don’t seem to have gone out and raised money from other companies.

“I think Jayne Anne’s idea, saying: We will give you £1m, but you have got to get off your butts and see the other 11 companies which are much bigger than Virgin Money in this area to get them to contribute something as well, is the way forward.

Sir Richard said: “My own feeling is they (Northern Rock Foundation) can also reduce their own overheads because the money is just coming to them and they are handing it out to good causes.

“I think if they are going to keep that kind of staff they have to prove they can do the job,” he said. “It seems to me they have waited to get cheques from one company and when that company went bust they haven’t tried to get cheques from other companies. They have to get off their a*** and prove themselves.”

Alastair Balls, chairman of the foundation, said: “Northern Rock Foundation received the offer from Virgin Money this morning. It is an interesting proposition, which we are ready to discuss, and expect to meet with Virgin Money this week. Any further public comment at this stage will not assist a constructive discussion.”

James Ramsbotham, NECC chief executive, said: "There is clearly some work to do before a firm future is secured for the Northern Rock Foundation, but it’s certainly welcome news that Virgin Money has agreed to continue the fund, with some stringent conditions, given the amount of good it does in our region. "

If a deal cannot be reached Sir Richard said he would consider setting aside £1m-a-year for good causes in the North-East, to be managed by his Virgin Unite charity.

"If they can show they can go out and raise money then their reason for being exists. Otherwise it would be sensible for the money to go to Virgin Unite which has no central overheads," he said.  

 

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