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It is salutary to recall that only at the beginning of the year, Northern Rock was the toast of the City for its commercial acumen. Nobody, they say, could have predicted this turn of events and its impact on one of the UK’s largest charitable grant-makers. It is not the first time that a corporate foundation has fallen on hard times. The Baring Foundation, which also was a major benefactor in the North East, suffered a similar fate in 1995 and the Camelot Foundation is now facing premature closure because pledged funding has not arrived. Perhaps a corporate funder should be required to protect itself by holding a wider range of assets. Perhaps we should accept that the fortunes of our funders, either individual or corporate, wax and wane and that their generosity should be not taken for granted forever.
Northern Rock Foundation (NRF) started with a grants programme of £6m and has grown with the success of its parent company into a planned programme of £30m this year. It benefits the North East and Cumbria where the company is based, and has become the most important independent funder of voluntary organisations in the region – and a well respected friend and supporter of the sector.
NRF has won awards for its grant-making and launched innovative programmes on domestic violence and penal reform. It has made leading contributions to the major capital appeals in the region – like the recent renovation of Newcastle’s Theatre Royal. Its support will often unlock contributions from grant-making trusts further afield whose most common opening question will be, “what has Northern Rock Foundation done to help you?”
Last year, the Foundation undertook an extensive consultation of stakeholders to develop policies and programmes appropriate to its growing wealth. It had begun working with Carnegie Trust and others on a social change agenda and envisaged a growing role in the policy arena, which is no mean achievement for a grant-maker with a corporate parent.
Following the run on the Bank in early September and the subsequent collapse of the share price, Northern Rock Foundation has had to revise its plans. It is able to honour all existing grants commitments, and, because of prudent development of reserves, to continue grant-making with a reduced programme of £7m in three programme areas for 2008. The Foundation will continue to fund some of the most pressing issues, including mental health, domestic violence and penal reform, but many other groups that have become accustomed to generous levels of support will have to look elsewhere.
"The value of Northern Rock Foundation's contribution to the social and cultural life of the region has been endorsed by political leaders of all hues."
The support in the region has been phenomenal. Led by the Newcastle Journal, messages of support for the voluntary sector and new deposits in the Bank, including from prominent local people, have flooded in. Six thousand Northern Rock plc jobs are at stake in the region in exactly the high-skill services industries where the North East wants to make its mark. The value of Northern Rock Foundation’s contribution to the social and cultural life of the region has been endorsed by political leaders of all hues. Some of those planning to take over the Bank, including Sir Richard Branson, have made clear their intentions to continue the Foundation’s good works. But none have yet committed themselves to a definite figure.
The trustees have acted robustly to announce ‘business on a reduced scale’ for the next twelve months but they will feel their fate and fortune is largely in others’ hands. If the Bank is sold, then the Foundation receives 15% of the share value, but the share price is at the mercy of the markets. If the Bank becomes part of an enlarged group, like Virgin Money, then the new owners will decide on whether to continue providing charitable support. It may be some time before the future is clear. By contrast, Barings collapsed overnight but the Baring Foundation, to its great credit, turned itself around and is still a respected member of the grant-making community. There is every prospect that Northern Rock Foundation will do the same.
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