Charity mergers up by 90%

Mergers across the charity sector have jumped by 90% over the past year, reaching a record high, new data has shown.

Analysis of Charity Commission data, conducted by RSM UK, has shown the number of charity mergers increased from 174 in 2023 to 331 in 2024, in line with growing cost pressures.

RSM said the “economic turbulence” faced by many charities last year looks set to intensify over the year ahead and has caused charity trustees to start looking more outwardly about their future.

“The stark reality of increasing costs has meant charities are looking for economies of scale and merging with larger organisations with greater access to resources,” the company’s partner and head of charities, Nick Sladden said.

“The increase in mergers is also likely to be due to better administration and the general tidying up of charity funds,” he added.

However, RSM noted that the upward trend currently witnessed may not be “clear cut”.

The firm said some mergers are likely to be signs of other activities, such as separate trusts being merged into larger foundations.

Additionally, the data can also be a sign that charities are going through a conversion process, whereby they are moving over to a new charitable form, such as charitable incorporated organisations (CIOs), which have fewer reporting requirements.

By contrast, a merger of charities means two or more legally separate charities coming together to form one charity. Mergers are registered and this helps charities secure future gifts, such as legacies.

By registering, gifts to the original charity (that has closed after merging) will pass to the merged charity.

Shoosmiths legal director, Robert Nieri added: “The cost pressures over the years, particularly more recently, have prompted a lot of organisations to do something they’ve probably needed to do for years; tidy up their governance into new, leaner models.

“However, when undertaking a merger, it’s not just the technical aspects that need to be considered, as combining two or more different cultures can be challenging, time consuming and a distraction from the day job. Whilst merging can create many efficiencies and opportunities for growth, the decision to undertake one shouldn’t be taken lightly.”