New funding for Northern Rock Foundation might avert closure

Virgin Money (chief executive Jayne-Anne Gadhia, pictured) offers the grant-maker £1m a year for the next five years if it can raise another £3m a year from other businesses

Jayne-Anne Gadhia
Jayne-Anne Gadhia

Three weeks after saying it would have to close, the grant-maker the Northern Rock Foundation has been offered £5m over the next five years by Virgin Money, if it can secure additional funding.

Virgin Money, the new owner of the bank that created the foundation in 1997, has offered £1m a year for the next five years, conditional on a further £3m being provided each year by other businesses in the north east.

Northern Rock, which was acquired by Virgin Money in 2012, has provided £1.5m of funding over the past two years. The foundation took in 5 per cent of Northern Rock’s pre-tax profits before 2007, when the bank ran into trouble, and has distributed grants totalling £215m since its inception.

Its annual income has dropped from more than £15m in 2008, 2009 and 2010 to less than £500,000 in the past two years.

Last month, the foundation said it would have to close after talks with Virgin Money proved fruitless.

But the foundation has been made a new offer after Ed Miliband, the leader of the Labour Party, highlighted the foundation’s plight in a visit to Newcastle last week.

Jayne-Anne Gadhia, chief executive of Virgin Money, said in a letter to Miliband that the company had "always admired the work done by the foundation" and since 2012 had "been creative in trying to find further ways to support them".

"Throughout that time, the foundation has insisted that they require a minimum annual donation of £4m to continue to operate," she said. "You will appreciate that for any company, let alone one with the history of Northern Rock, this is a huge amount of money to commit to one charity."

Gadhia said that the match-funding offer would ensure "that the legacy of the Northern Rock Foundation becomes one shared with the north-east business community".

A spokesman for Virgin Money said: "We have offered to meet the foundation, and until that meeting has taken place we can’t comment further. I hope we will meet representatives of the foundation this week."

Alastair Balls, chair of the Northern Rock Foundation, said in a statement: "The Northern Rock Foundation received the offer from Virgin Money on Monday morning. It is an interesting proposition, which we are ready to discuss. We expect to meet Virgin Money this week. Any further public comment at this stage will not assist a constructive discussion."

Topics:
Finance

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