Sources close to the charity said they believed that as many as half the organisation's 27 staff could lose their jobs as a result of the bank's much publicised and controversial woes.
The foundation's budget, which was reduced from a projected £30m to £22m in this calendar year, will fall to only £7m in 2008.
It has also axed four of its seven funding programmes for the coming year (Third Sector Online, 30 November).
In the past, the organisation has typically received 5 per cent of Northern Rock's profits to fund its grant-giving activities.
Rob Williamson, director of policy and communications at the foundation, said the organisation had not made any decisions about the job situation.
"The trustees will have to look at what staffing levels the trust will need, but that process has not started and we are not talking about any numbers," he said.
No discussions had taken place with union representatives about potential job losses, he added.
It is unclear so far whether any takeover of Northern Rock would include the foundation.
Virgin Money, which has emerged as the preferred bidder for the troubled bank, pledged to continue to support the foundation at a level related to the performance of Northern Rock itself.
A Virgin Money spokesman said it would provide up to £10m of funding in each year that Northern Rock's profits exceeded £638m, the organisation's pre-tax profits for 2006, until 2015. This would be capped at a total of £50m during that period.
Doug Nicholls, national secretary for the voluntary and community sector at trade union Unite, warned that reducing the foundation's charitable commitments could have a big impact on the organisations it funds.
"It is a neglected feature of these kinds of financial crises that very often these institutions do have a very laudable charitable arm," he said. "But in the context of local authorities shedding funding for projects, the projects do rely on foundation funding."