In the last financial year (2023/24), the charity sector witnessed a notable surge in mergers. With this in mind, combined with other challenges - what is the future for charitable organisations?

Current Trends in Charity Sector Mergers 

Data from The Good Merger Index provided key statistics from the 2023/24 tax year of charitable transactions.

The research, published in March 2025, found that in total, there were 63 mergers involving 131 organisations, representing a 30% increase from the previous year. 65 of the organisations involved had incomes of less than £1 million. 

The total value of these deals reached £192 million, a 500% increase from the previous year with the 20 largest mergers represented almost £182 million in value. 

Takeovers continued to be the most common form of merger, accounting for 50 out of the 63 deals, an increase of nine from the previous year. There was also a steady increase in mergers of equals, group structures, and subsidiary models, up to 16% from 8% last year.

Driving Forces of Recent Charity Mergers

Charity mergers are on the rise due to several factors. Financial pressures, recruitment challenges, and shrinking budgets are compelling charities to explore mergers as a viable solution. 

The economic turbulence faced by many charities last year looks set to intensify over the year ahead, prompting charity trustees to start looking more outwardly about their future. 

Smaller charities are looking to extend their geographical reach, allowing them to serve a broader community. 

Larger entities can enhance, influence and advocate more effectively for their causes an attractive objective which is not always achievable for smaller charities. 

Non-essential charitable spending continues to fall, with a quarter of charitable donors reducing or cancelling donations, and 39% intending to reduce donations in the future. Merging can help widen the donor pool and provide better access to government funding through combining supporter bases, increasing visibility and appealing to broader audiences, while also presenting a more unified, efficient organisation with greater capacity and impact, presenting themselves more attractive for funding. 

Not-for-profit fraud prevention service Cifas found 214,000 fraud cases targeting charities filed in the first six months of 2024, with 92% suffering some kind of financial loss. Larger charities often adopt better cyber security practices, incentivising smaller charities to merge in a deterrence of fraud. 

Fraud exposure is also impacting governance, leading to decreased morale, reputational damage, loss of staff and volunteers, and limiting the activity of a charity or closing its operations entirely. 

Operational costs such as regulation and governance impact all charities, often increasing the burden on individuals willing to take on trustee roles therefore driving the need for larger more established organisations. 

Future Considerations

The reasons for the increase in the numbers of charities seeking to merge is clearly outlined above, and there are equally important future implications which should be considered. Such factors include:

Mergers result in larger responsibilities for trustees and increased regulatory obligations. Maintaining smaller entities can often make regulatory burdens more manageable and potentially help sustain charitable activities.

Larger organisations in financial surplus often merge with smaller charities facing deficits. Nonetheless, larger charities are not immune to financial challenges, with their deficits rising from 16% (2022/23) to 22% (2023/24), which will likely drive further mergers in the future. 

Localising an organisation can foster positive connections with smaller communities or focus groups. Additionally, Volunteers and the wider community may be discouraged from supporting larger organisations therefore making the option of merging less appealing.

It is important to ensure mission compatibility and develop a shared long-term vision and strategic plan. Planning for system integration and optimising resource use can enhance efficiency and reduce costs.

Comprehensive risk assessments and contingency plans should be prepared to address unforeseen issues. Clear and transparent communication strategies are crucial to keep stakeholders informed and engaged.

How Can Girlings Assist with your Charity Merger?

Girlings can provide comprehensive support throughout the merger process, ensuring that all legal aspects are handled efficiently and effectively. Our team of experienced solicitors, including Caroline Armitage and Elesha Bradford, have successfully navigated several charity mergers this year.

As well as being a Charity Law and Governance expert, Caroline Armitage offers a wealth of experience in corporate and commercial law as a Solicitor and also as a specialist adviser to charities. Caroline had this to say about the recent upwards trend in mergers:

“The current funding and legal environment is an undoubted challenge for charities of all sizes.  A well-planned merger can really help manage in this challenging environment, ensuring sustainability, and enabling the sector to continue its mission to help the most vulnerable in society and advance our cultural and civic life as a country” 

Assisting Caroline on numerous transactions this year, Elesha Bradford, Associate Solicitor in the Corporate, Banking & Finance and Commercial Law team, shares her thoughts on the recently published statistics: 

“One of the things that strikes me is how important collaboration is in mergers.  I know that as lawyers a collaborative approach to achieving the goals of our charitable clients really smooths the way in a merger situation – which is always a challenging environment for those involved”

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