The idea of establishing Northern Rock Foundation emerged in the mid-1990s during discussions at the then Northern Rock Building Society about demutualisation. In April 1996 the Society’s chairman, Robert Dickinson, announced the formation of the Foundation as part of its plans to become a plc. The proposal was to establish a charitable body with approximately 15% of the issued share capital, and a covenant of 5% of the new plc’s annual profits. In October 1997 both the bank and the Foundation became a reality.
Formally launched in January 1998, the Foundation was established with a principal, but not exclusive, focus on the North East of England. Its first grant programme supported disabled people and their carers. In the next few years other areas of interest were added: children, older people and community regeneration. In 2000, the Foundation began funding high-profile culture schemes.
From the start, alongside its commitment to responsive grant-making, the Foundation aimed to take other more experimental approaches, and to inform the thinking and planning of regional and national policy-makers. In 1999, the Trustees established a £1-million ‘big ideas’ pot whose theme would change annually. In the first year the focus was the region’s coalfield communities; in 2000 it was penal reform. The following year, the fund was committed in response to the outbreak of Foot and Mouth disease.
As it developed its grant-making, the Foundation also saw a need to support voluntary and community organisations in other ways. Training and development, through very small grants, was offered, allowing organisations the opportunity to visit a similar project elsewhere, to go on a course, or to buy in some outside help. The Foundation also commissioned high-quality training on governance, management and aspects of law affecting the voluntary sector.
As support for high-profile cultural activities came onto the Trustees’ agenda, they created the Northern Rock Foundation Writer’s Award. The Award was unique in recognising an established writer’s creativity and potential, rather than being a prize for a particular work. Open only to writers living in the North East and Cumbria, the first winner was poet Anne Stevenson; she was followed by Julia Darling, Tony Harrison, Gillian Allnutt, Andrew Crumey and Sean O’Brien.
As the Foundation approached its fifth anniversary, the Trustees decided to look again at its work and its territory. A particular concern was that some programmes applied to certain locations and types of work, while others did not. From 2003, the Trustees decided that they would offer funding exclusively in the North East and Cumbria. They also introduced new programmes which continued many long-standing aspects of the Foundation’s work, but also built on some newer developments: economic regeneration, voluntary sector infrastructure and research. Alongside the new programmes came a new logo, and a new building – the renovated Old Chapel in Gosforth, Newcastle upon Tyne.
Meanwhile, the Trustees continued to fund large-scale initiatives designed to tackle particular problems in more depth. During 2003 to 2006 they launched three: a region-wide programme of training for the voluntary sector, run in partnership with Project North East; a demonstration scheme and evaluation looking at better ways of supporting victims of domestic abuse; and a series of projects testing out different approaches to tackling re-offending.
The Trustees also introduced a formal loans scheme in 2003, after testing out an approach with earlier investments in the North East Employment Bond and the International Centre for Life. The Foundation made a proportion of its reserves available each year for organisations to apply for loans from £5,000 to £500,000 for up to five years. The scheme was established in partnership with Charity Bank.
Alongside its main programmes and initiatives, the Foundation has supported a wider range of charitable activity through a scheme where it matches every pound raised for charity by employees of Northern Rock plc. Such was the success of the staff matching programme, from January 2006 the Trustees agreed to give two pounds for every pound raised. By the summer of that year the amount raised by staff under the scheme when matched by the Foundation had reached almost £4 million.
In 2005 the Trustees decided that the time was again right to examine the Foundation’s work, particularly given the further expansion of its grant-making, which in 2004 had exceeded £25 million. The Foundation organised a series of consultation events for applicants, seminars with experts on particular topics and an internal review of grants made. The programme review, which ran from September 2005 to April 2006, involved nearly 1,000 people and organisations giving their views on the Foundation’s work.
In responding to the review the Foundation’s Trustees revised their priorities. Some programmes continued with only minor changes; others involved the Foundation in new areas of work. But in going forward for the next five years, the Foundation’s main aim was to ensure it made full use of all the tools at its disposal. It would continue to make most investments through grant programmes, but alongside these it would commission training and development services, and seek to inform and influence the wider policy environment. It would also continue to support large-scale initiatives focusing on particular problems.
In the autumn of 2007, extraordinary events in the global financial markets affecting Northern Rock plc had a major knock-on effect on the Foundation. Given the uncertainties about future income, the Foundation’s Trustees decided to scale back their planned expenditure. As the situation continued, in November 2007 the Trustees announced that they were closing four of their seven grant programmes and that they would go forward into 2008 with a total grant budget of £7 million. Whilst this was considerably less than had been anticipated, the Trustees were still hopeful of a resolution to the situation which would ensure a future for the Foundation. However, given the reduction in the scale of activities, the Foundation had also to reduce its staffing level.
On Sunday 17 February 2008, the Chancellor of the Exchequer, Alistair Darling, announced that the Government had decided to take Northern Rock plc into temporary public ownership. As part of the arrangement, the Chancellor stated that the Foundation would be guaranteed a minimum income of £15 million a year in 2008, 2009 and 2010. This would be paid directly by Northern Rock, and would be a condition of any sale if it were sold in this time. The Chancellor also said that the new Board of Northern Rock would be asked to identify a viable long-term future for the Foundation.
On Friday 22 February the legislation to take Northern Rock into temporary public ownership came into effect. The special shares held by Northern Rock Foundation were converted into ordinary shares and their ownership transferred to the Treasury. Northern Rock’s deed of covenant with the Foundation also ceased; in its place the company confirmed alternative arrangements guaranteeing the Foundation a minimum income of £15 million per year in 2008, 2009 and 2010.
Rob Williamson
February 2008