While each organisation’s context is different, a convergence of pressures, regulatory, financial, and operational, is pushing the merger conversation forward across the charity sector. We recently spoke on this topic at the Charities Institute Ireland Shared Island Leadership Forum, where it was clear that these conversations are becoming increasingly relevant for leaders across the sector.
Why are charities increasingly condering mergers?
Rising operational costs are having a serious impact in the charities sector. Expenses such as staffing, rent, and utilities have climbed significantly, while demand for services continues to grow. This dual pressure can be especially challenging for smaller charities. When coupled with declining public donations, affected by ongoing cost-of-living issues it becomes clear that a merger may offer a practical way for two or more charities to share resources, reduce duplication, and maintain essential services. Larger, combined organisations are often better positioned to secure funding, streamline administration and deliver services more efficiently.
Charities that rely on international aid or external funding are also facing considerable strain. The 2025 European Commission budget, for example, cut international cooperation funding by 12%, adjusted for inflation compared to 2021 levels. The recent closure of the United States Agency for International Development (USAID) has dealt another blow, particularly to Irish-based NGOs. In an increasingly competitive funding environment, mergers can present a stronger, more resilient profile to potential donors and enhance overall credibility.
There is also growing scrutiny from funders and regulators around duplication, fragmentation and impact within some charitable sectors. Funders now expect a larger proportion of their contributions to go directly to services and are seeking reductions in overheads, and they increasingly favour organisations that demonstrate collaboration and scale. Mergers can reduce overlapping functions, consolidate advocacy efforts and strengthen public trust.
Ultimately, mergers are no longer just a defensive move they’re becoming a forward-looking strategy. For many charities, joining forces offers a realistic path toward greater impact, resilience and long-term viability.
Methods of merger
Although there are a number of legal methods to affect a merger, we set out below the three main legal pathways that we most commonly see for merging charities in Ireland. Each method has its own benefits depending on the size, structure and aims of the merging organisations.
Asset transfer to a new charity
Using this method, two or more existing charities transfer their operations, assets, and employees into a newly established charity. Following the asset transfer, the transferring charities are wound down as their charitable purpose and activities are being carried out by the newly established charity. This new charity operates as a unique entity with a new name and board. While this option is sometimes preferred, because boards consider that it is the best way of signifying a “merger of equals”, it brings with it the significant drawback that a new charity has to be incorporated or formed and registered with the Charities Regulator. This is a lengthy and time-consuming process.
Asset transfer to an existing charity
Owing to the drawbacks associated with new company formation and charity registration, many merging charities opt for a merger structure where one charity fully integrates into another existing charity. Using this method, the recipient charity takes on the operations, assets and employees of the transferring charity. The transferring charity then winds up, and the recipient charity may amend its constitution, its board composition and (often) its name, to reflect the fact that the merger has taken place. This is the legal structure which was used by the ICTR and Fundraising Ireland when they came together to create Charities Institute Ireland.
Merger by control
A third legal pathway to effecting a merger involves one charity assuming control of another sometimes referred to as becoming the “parent”, for example by becoming its sole member or by putting in place a new board, or both. While there can be logical reasons to maintain the “subsidiary” charity as a separate entity to the “parent” charity, this is generally seen as the least popular of the three methods of merger discussed here and it will only suit in specific circumstances. At times, this method can be a pre-cursor to a full asset transfer (Method B above).
In each case a variety of operational and legal issues come into play, which require careful consideration by the charity trustees on both sides of the merger. Some of the key issues are discussed below.
Key considerations for charity trustees
Before proceeding with a merger, charity trustees should:
- Ensure alignment of charitable purpose: Trustees should check for shared charitable objectives and purposes as set out in each charity’s constitution. Compatible cultures, values and a shared ethos are critical to successful integration.
- Assess the impact on service users/beneficiaries: Mergers should enhance or at least preserve service delivery, especially where public need is growing.
- Check governing documents: Trustees must verify whether the charity has the legal powers to merge under its constitution or if amendments are needed.
- Seek necessary approvals: Charities may need various approvals to proceed with a merger. These may include consultation with or permission from members, funders or landlords as well as domestic and international partners.
- Conduct due diligence: In almost all cases it will be necessary to have a due diligence exercise carried out, covering legal and financial areas.
- Communicate early and clearly: Stakeholders including staff, beneficiaries, and donors should be consulted and kept informed throughout the merger process. For a smooth transition to the new charity, it is crucial that all involved feel heard. This is especially the case where a larger organisation is taking on the operations of a smaller grassroots charity.
- Consider the impact on donations and bequests: Unlike in England, Wales, Scotland and Northern Ireland, Ireland does not have a central register of charity mergers. This can cause complications for legacy donations and bequests. A similar mechanism would be a welcome approach in Irish law and would remove one of the most complicated issues for charity trustees when considering a merger. When two (or more) charities are merging in Ireland, careful planning and considered documentation is needed to account for how legacy donations and bequests will be dealt with following the completion of the merger, particularly because of the absence of a register.
- Plan operational integration: Systems, staffing, and branding need to be carefully merged to minimise disruption. In the modern commercial environment, IT and digital assets must be included in the legal paperwork. There must also be a plan put in place to ensure a smooth transfer of employment operations, particularly where long-standing working policies are in place.
- Obtain professional advice: This is essential for legal compliance, tax implications, employment matters, and due diligence. A merger between two charities may seem straightforward, but there are many considerations and requirements which trustees must be aware of. Legal advice can be invaluable to ensure that trustees do not unknowingly commit any breach of legal rules applicable to charity mergers.
The Charity and Not-For-Profit team regularly guides merging charities through what can be a challenging process, with the aim of ensuring that the merged entity is fully equipped to maximise its impact for the benefit of its beneficiaries long into the future.
This content was originally written for the Charities Institute Ireland.
The content of this article is provided for information purposes only and does not constitute legal or other advice.
