The Northern Rock Foundation has confirmed its closure is likely after it was unable to raise the additional funding it requires to keep it afloat.
The foundation said in April that it would probably close after it was unable to reach an agreement over its funding from Virgin Money, which in 2012 acquired Northern Rock bank, the foundation’s funder.
Three weeks later the grant-maker said that it had been offered a lifeline in the form of £5m over the next five years from Virgin Money, if it could secure an additional £3m a year from other businesses funding.
But a statement from the foundation today said: "It is with deep regret that, after 17 years of grant-making, Northern Rock Foundation will close its current grant programmes at the end of 2014 and begin to prepare for the foundation’s now likely eventual closure."
It said that the foundation’s trustees had considered Virgin Money’s offer of £1m a year for five years but concluded that it was "not a viable option" for the foundation to raise the additional £3m a year.
"Trustees believe there are now no funding routes left to pursue (although they would be open to viable approaches) and will therefore proceed with the scaling down of the foundation's work."
It said the remaining funds "will be used to achieve long-term positive impact on the lives of children and young people in the region, and also to support the development and sustainability of voluntary organisations. Trustees will decide on their final plans in the following months, but we are pleased to announce now our intention to support the opening of a Youth Zone project in the north east, and will be working with Sir Peter Vardy and the charity Onside Youth Zone, alongside Virgin Money, to achieve this."
Northern Rock, which was acquired by Virgin Money in 2012, has provided £1.5m of funding to the foundation over the past two years. The foundation took 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.
The charity’s annual income has dropped from more than £15m in 2008, 2009 and 2010 to less than £500,000 in 2011 and 2012.
Read Third Sector’s analysis of the voluntary sector in north east England, published in October’s print edition, here.