“Mounting financial pressures” such as minimum wage increases and employer National Insurance contributions are causing a spike in the number of charity mergers, a report has found.

During 2023/24 there were 63 mergers involving 131 charities, an increase of 31% from the previous year and 24% up on figures from 2021/22.

The number of larger organisations merging has seen the value of merger deals rocket. In 2023/24 the total value of deals reached £192m, five times the level of the previous year.

Other factors contributing to the rise in charity mergers are challenges around falling income from government contracts and recruitment issues, according to charity consultancy Eastside People, which has revealed the findings in its latest Good Merger Index.

It said: “It is widely acknowledged that the charity sector is facing numerous financial challenges such as the cost-of-living increases, recruitment difficulties and issues with securing contract uplifts.

“Many charities are considering mergers, and this data tells us that they have taken the next step to develop and implement them.”

More 'mergers of equals'

The research also found that while takeovers are the most common merger type, there was a doubling of “mergers of equals”, involving charities of similar group structures and models.

“Most notably, mergers of equals represented 16% of all mergers, compared to just 8% in the previous report,” found the consultancy.

“Over the last 12 months we have seen a greater than 30% rise in the number of merger-related projects managed by our consultants.” said the consultancy’s head of partnerships and mergers Cara Evans.

“Additionally, there is an increasing interest in using merger as a strategic approach to achieving sustainability against a background of growing demand and rising costs.

Among mergers cited in its report is a deal between learning disability support charity Kisharon Langdon and Rennie Grove Hospice Care.

“We firmly believe that together we will be a stronger organisation, able to provide a wider range of choices and services to the 450 people who now rely on us every day,” said Kisharon Langdon trustee Andre Loftus.

Rennie Grove Hospice Care chief executive Stewart Marks added: “We need to be prepared for the growing population of people needing end-of-life care. A bigger, more efficient organisation will be able to deliver equality of care across the area, as well as reaching out to different groups of people who haven’t engaged with the hospices before.”

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