The Northern Rock Foundation is launching a three-year scheme to reduce the number of prisoners that re-offend, by giving £4.2m to five specialist partnership agencies.
The Depaul Trust, crime reduction charity Nacro, and the No Way Trust will team up with the Prison Service and prisoners across the north-east to help reduce the rate of re-offending within two years - currently standing at 58 per cent.
Leo Finn, chair of the foundation, said: "The trustees wanted to invest in organisations that can deliver real change for prisoners and their communities."
The No Way Trust will engage young inmates with stimulating activities.
Nacro and the Depaul Trust will provide prisoners with resettlement support, while the Depaul Trust will also give supported accommodation and training for young offenders on release.
The foundation will also back research by New College Durham and the International Centre for Prison Studies to identify new and better ways to tackle re-offending.