Mergers between UK charities increased 90 per cent last year, according to a new report, with charities seemingly seeking to gain resilience by joining forces in the face of economic turbulence and a lack of funding.
RSM’s analysis of UK Charity Commission data found that the number of charity mergers jumped from 174 in 2023 to 331 last year – an increase of 90 per cent. Furthermore, with more than 180,000 charities across England and Wales, researchers believe that mergers could be a popular option for years to come.
RSM write that mergers between charities can offer numerous benefits to the sector “including reducing the duplication of efforts and resource where multiple charities might have the same objectives.”
Over recent years, UK charities have faced increasingly tough conditions – with direct government grants down during a decade of austerity, consumer spending pressures hitting donations, a drop in income following COVID-19 and fraudsters targeting the sector.
RSM UK partner and Head of Charities Nick Sladden commented: “Carrying out a merger or even being aware of merger opportunities should be on every charity trustee’s radar. The economic turbulence faced by charities last year, which is set to intensify in 2025, has encouraged them to become more outward looking 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 increase in mergers is also likely to be due to better administration and the general tidying up of charity funds.”
However, RSM also suggests that the increase in activity may also have been influence by other factors, such as separate trusts merging into larger foundations in order to boost investment returns and charities moving to new charitable forms like charitable incorporated organisations (CIO).
CIOs, which are described as a less well-known structure than trusts and charitable companies limited by guarantee, have fewer reporting requirements and have become the most popular structure for new charity registrations over recent years.
Shoosmiths Legal Director Robert Nieri commented on the findings: “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.”
Nieri continued: “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.”
Find out more about the key UK M&A trends for 2025
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