Mergers in the charity sector fell 11% last year from a record high in 2024 as economic uncertainty took hold, according to analysis of Charity Commission data* by leading audit, tax and consulting firm RSM UK.
The number of charities recording mergers declined from 142 in 2024 to 126 in 2025. There are over 171,000 registered charities in the UK**, suggesting there’s scope for further consolidation in the sector, particularly where two or more charities are looking for economies of scale, and also have shared goals.
Hannah Catchpool, partner and head of not-for-profit at RSM UK, said: “Economic uncertainty was a key theme in 2025, which dampened charities’ appetite to merge. Charities are having to tackle various cost pressures such as the increase in both national minimum wage and employers’ National Insurance, at a time when government funding and support remains static. Combined with subdued economic growth and constant speculation around policy changes, this has led charities to take a ‘wait and see’ approach before pressing ahead with big strategic decisions such as mergers.
“The value of charities merging is clear. They can benefit from economies of scale by pooling resources, funds and people to grow their presence in the market. This in turn should positively impact the communities they set out to help. A merger comes with it challenges though, so it’s not always the most appropriate option. Other alternatives include collaborative working, joint ventures, group or umbrella structures, or informal partnerships. There is also collaborative working for two or more charities working together on a project – like pooled fundraising, administrative shared services, co-located premises or joint service delivery – while remaining separate legal entities. While these options may offer a more flexible way to share resources and expertise without the complexity of a full merger, it’s unlikely they will yield the same level of overall cost savings.
“Looking ahead, economic challenges are set to continue, with inflation likely to remain around 3% in the first quarter, and only one further interest rate cut expected this year. Charities face further cost pressures, combined with a slowdown in real wage growth, which could see consumers cut back on charitable donations. As a result, we may see more charities take the plunge and merge. Charities must focus on innovation, by embracing AI to improve productivity, and ensuring they are operating as cost-effectively as possible.”