Five Reasons Why More Charities are Thinking Merger

Running a charity is both fulfilling and highly impactful. Yet, in recent times, an increasing number of Charity Boards are questioning whether “going it alone” is still the best path forward. For many, merging with a like-minded charitable organisation offers a strategic opportunity to enhance impact, streamline operations, and ensure long-term sustainability.

This shift comes at a time of significant regulatory, financial, and operational pressure—and amid an overall tightening of governance and reporting requirements for the sector. For many Directors (also known as Charity Trustees), there is a fork in the road ahead; Continue to operate independently under growing strain, or consider strategic collaboration or full merger as a means to serve beneficiaries more effectively in the medium and long term. For others, a starker choice is emerging where their immediate financial position means a “rescue” merger or takeover may be the only way to sustain their services.

A Growing Trend

While comprehensive figures have not been collated in Ireland, according to the “Good Merger Index”, the UK saw an increase of 31% in charity mergers during 2023/2024. These mergers span every type of organisation, from educational institutions to housing charities to theatre companies. Mason Hayes & Curran’s Charities Practice has seen a similar rise in interest in charity mergers here in Ireland over the same period. In light of the steady rise in interest by Directors in potential mergers and collaborations, we explore below five key drivers of this trend and how both necessity and opportunity are converging for the charity sector.

Top Drivers towards Charity Mergers

A variety of factors are prompting Charity Boards to consider merging with other charitable organisations, where there is an alignment on purposes and objectives. These factors range from governance to logistical to administrative to financial to geopolitical, but each has pushed more charity Boards to think seriously about how best they can maximise charitable impact in uncertain times.

1. Increasing Regulation

Certain provisions in the Charities (Amendment) Act 2024 have been brought into force and the remainder await commencement. The Amendment Act has the ultimate aim of increasing transparency, tightening governance, and increasing financial accountability obligations on charities. The Charities Regulator, until such time as the Amendment Act commences in full, continues its operations under its Charities Act 2009 powers. The first principle of the Charities Regulator’s Charities Governance Code includes a requirement that charities should consider the advantages of merging on an ongoing basis to advance their charitable purpose. For some organisations, considering a merger has become a necessity in this era of increasing regulation.

2. Rising Costs and Inflationary Pressures

The charitable sector has not been immune to the overall increase in costs, particularly staffing, rent and utilities. At the same time demand for charitable services, across virtually all charitable sectors, is climbing. Smaller charities may simply be unable to afford to scale up quickly enough to meet both demand and costs. Rising costs and demand are compounded by some organisations seeing a drop in public donations due to ongoing cost of living challenges. Merging into a larger, purpose-aligned charity can allow a smaller charity to pool resources, effect efficiencies and sustain critical services. Larger charities can avail of proportionately lower administration costs and can have a wider reach in terms of fundraising and accessing grants.

3. Shrinking International Aid and External Funding

For many years Irish charities have relied on a combination of State grants, corporate partnerships, EU or International funds and individual donations to maintain and grow their operations. The recent reduction and reallocation of international aid by key governmental and intergovernmental donors have left charities in the NGO sector in particular facing stark funding shortfalls. The European Commission’s 2025 budget has allocated 12% less to international cooperation than 2021 levels on a real income basis. The formal shutdown of the United States Agency for International Development (USAID) in July 2025 has also been a major blow to funding for charitable NGOs including those headquartered in Ireland. With funders increasingly focused on tightening budgets, mergers can offer a pathway to operational resilience and donor confidence as well as having a significant efficiency benefit.

4. Avoiding Duplication and Enhancing Impact

Funders and regulators are now placing greater emphasis on efficiency, impact, and collaboration. Both small and large funders are increasingly conscious of the proportion of their donation which is spent on service provision rather than administration and governance. Mergers can reduce duplication of administrative functions and of competition for grants, while enabling stronger unified voices in advocacy and policy work. According to latest available statistics, there is one charity in Ireland for every 500 people, which is raises questions of efficiency and fragmentation from both the public and large funders. Mergers, when well executed, can lead to stronger, more coherent service provision and boost public trust.

5. Capacity Struggles and Governance Pressures

Recruiting and retaining qualified charitable Board Directors remains a challenge, particularly in volunteer-only organisations. Expanded compliance responsibilities under the 2024 Act and funding reporting requirements mean Charity Boards need deeper governance and financial expertise than ever before. A merger can allow for consolidation of governance and finance functions and more strategic allocation of Director talent.

A Strategic Decision with Long-Term Implications

Assessing whether a merger (or a collaboration) would better advance your organisation’s charitable purpose is not just best practice, it forms part of Charity Boards’ ongoing fiduciary duties towards your charity. In many cases, joining forces with another charity with the same charitable purpose will better serve the charitable objectives of both organisations, as well as ensuring the long-term sustainability of their shared operations.

A merger is a major step and seeking early advice from professional advisors can help ensure the process is as efficient and effective as possible. The Charities team at Mason Hayes & Curran LLP regularly guides organisations through these processes with the aim of ensuring merging charities can maximise their impact for the public good.

The author would like to thank her colleague Mark Cooper for this help in the preparation of this blog.

This article is the view of the author(s) and does not necessarily reflect IoD Ireland’s policy or position.