Why don't more charities merge or close when the mission is done?

The debate in brief

England and Wales have roughly 170,000 registered charities, but a significant proportion are dormant, inactive, or so small they struggle to deliver any meaningful public benefit. The Charity Commission removes thousands of charities from the register each year, most for failing to file accounts, yet the total number barely shifts. Meanwhile, genuine mergers between charities remain rare.

The sector treats closure as failure and merger as surrender. Founders hold on, trustees fear reputational damage, and funders rarely fund the process of winding down. The result is a landscape cluttered with organisations that consume trustee time, occupy register space, and sometimes hold assets that could be put to better use elsewhere. Critics argue the sector needs a healthy culture of managed exits and consolidation. Defenders say the diversity of the register reflects genuine community need.

Quick takeaways

The arguments

The case for more closures and mergers

The charity register is not a measure of sector health. A significant number of registered charities file no accounts, hold negligible assets, and deliver little or no public benefit. The Charity Commission's annual removal exercises take thousands of charities off the register each year — 4,146 were removed in 2022-23, the majority for persistent default in filing — but new registrations keep the total roughly stable.

This matters because dormant charities are not harmless. They occupy trustee time, absorb regulatory resource, and can hold restricted assets that sit unused for years. Where multiple charities pursue identical objectives in the same geography, the duplication fragments funding, confuses referral pathways, and weakens collective impact. Eastside People (formerly branded Eastside Primetimers), a leading UK advisory firm on charity mergers, has argued consistently that the sector would benefit from far more strategic consolidation, and that funders and infrastructure bodies should actively support it rather than treating merger as a last resort.

The case for caution

Not every small or inactive charity is a problem. Many are hyper-local, volunteer-run organisations with minimal overheads that serve specific communities in ways that larger charities cannot. The diversity of the register reflects genuine pluralism: faith groups, village halls, memorial funds, and specialist services that exist precisely because no larger body has chosen to address their particular cause. Forcing consolidation risks losing this granularity.

There is also a legitimate concern about who decides when a charity's mission is "spent." The assumption that the register should be tidied up can carry a bias toward professionalised, well-resourced organisations and against grassroots bodies that operate informally. The Charity Commission has rightly been cautious about using its removal powers beyond cases of clear regulatory default or serious misconduct.

The missing infrastructure

Perhaps the strongest argument is not for or against closure, but for better support when closure or merger is the right decision. Winding down a charity involves legal costs, staff redundancies, asset transfer negotiations, and communication with beneficiaries and funders. Most charities have no budget for any of this. Funders are reluctant to make grants for an organisation to close. Trustees who decide to wind up face the perception — from peers, funders, and the public — that they have failed.

Lloyds Bank Foundation's Small Charity Trends research (2024) found small charities under growing strain from rising demand and squeezed funding — the kind of pressure that can leave an organisation continuing to operate well past the point where it delivers meaningful impact, with no clear support structure to help it close in a planned way. Sector commentators, including merger advisers such as Eastside People, have argued that a well-managed wind-down protects beneficiaries far better than a slow decline into ineffectiveness, and that this requires dedicated funding for transition costs that the sector currently lacks.

The evidence

The Charity Commission register for England and Wales contains approximately 170,000 charities. The Commission removed 4,146 charities in 2022-23, the large majority for persistent failure to submit annual returns (Charity Commission Annual Report 2022-23). Despite these removals, new registrations keep the total broadly stable, with approximately 9,000 applications for charitable status received in 2023-24 (Charity Commission Annual Report 2023-24).

Genuine mergers remain rare. Eastside People, which has advised on more charity mergers than any other UK firm, tracks completions annually through its Good Merger Index: 48 in 2022-23, 63 in 2023-24, and 94 in 2024-25 — the highest total in the index's 12-year history, driven substantially by a wave of independent school mergers. Even at that peak, mergers remain a tiny number against a register of 170,000. The index's research has identified the key barriers to merger as cultural (merger seen as failure), practical (legal and financial complexity), and structural (funders unwilling to fund the process).

The Charities Act 2011, as amended by the Charities Act 2022, includes specific provisions designed to make mergers easier. These include a register of charity mergers maintained by the Charity Commission, vesting declarations that transfer property automatically on merger, and provisions to preserve donor intent when a charity merges with another. Despite these legal tools, take-up remains low.

NCVO's UK Civil Society Almanac consistently shows that the charity sector is heavily concentrated by income: charities with income above £10 million make up under 1% of voluntary organisations but account for around 57% of the sector's total income (UK Civil Society Almanac 2024, the most recently published edition). At the other end, tens of thousands of registered charities have annual income below £10,000. Many of these micro-charities are entirely volunteer-run and function well, but a proportion are effectively dormant, filing nil returns year after year.

The Charity Commission's 2018 group case report, Charities at risk of financial distress, examined a cohort of larger charities reliant on public sector funding and found that trustees did not always respond quickly or decisively enough to signs of financial difficulty. In several cases, an earlier, orderly closure or merger would have served beneficiaries better than the slow decline that followed. The report underlined the difficult but crucial role trustees play in recognising financial distress early and choosing between recovery, merger, or wind-down.

Current context

The Charities Act 2022, which commenced in stages from 2023 onwards, has simplified some of the legal mechanics around mergers, including streamlined vesting declarations and a strengthened merger register. The Charity Commission has published updated guidance on closing a charity and on the merger notification process. However, these legal improvements have not yet shifted the cultural reluctance.

The financial environment is pushing more charities toward crisis. The employer NIC increase (NCVO estimates this will cost the sector £1.4 billion a year), persistent inflation in service delivery costs, and constrained public funding mean that charities already operating on thin margins face growing pressure. Lloyds Bank Foundation and other funders working with small charities have observed similar patterns: organisations continuing to operate at a level where they can no longer deliver meaningful services, but feeling unable to close.

The Charity Commission's ongoing programme of register maintenance — contacting charities that have not filed returns and removing those that do not respond — continues to clean up the most obvious cases of inactivity. But this addresses the symptom, not the cause: a sector that lacks the cultural norms, practical infrastructure, and funding to support planned, dignified exits.

Last updated: July 2026

What this means for charities

If your charity is struggling to recruit trustees, retain staff, raise funds, or deliver its stated purposes, the question of whether to continue is a legitimate governance conversation, not a sign of failure. Trustees have a legal duty to act in the charity's best interests, and sometimes that means recognising that the organisation has served its purpose or is no longer viable.

Practically, boards should start by reviewing whether the charity's objects are still relevant and whether its activities are delivering meaningful public benefit. If the honest answer is no, the options include amending objects, merging with a stronger organisation, or winding up and transferring assets to a charity with similar purposes. The Charity Commission's guidance on closing a charity sets out the legal steps. Eastside People offers advisory support specifically on mergers and closures.

Funders have a role too. Grant-makers who genuinely care about impact should be willing to fund managed closures and merger processes, not just ongoing delivery. A charity that closes well — protecting beneficiaries, transferring assets responsibly, and communicating honestly — is a better outcome than one that drifts into irrelevance.

Common questions

What is a zombie charity?

A zombie charity is an informal term for a charity that remains on the Charity Commission register but is no longer actively delivering its charitable purposes. It may still file minimal returns, hold a bank account, and technically exist as a legal entity, but it has no staff, no active programme of work, and no meaningful engagement with beneficiaries. The term is not used by the Charity Commission itself but is widely used in sector commentary to describe the problem of register clutter.

How do you close a charity?

The process depends on the charity's legal structure. For charitable companies, it involves a members' resolution and either voluntary strike-off or formal liquidation. For unincorporated charities and charitable incorporated organisations (CIOs), the governing document will typically set out the dissolution procedure, usually requiring a trustee or member resolution and transfer of remaining assets to a charity with similar objects. In all cases, the Charity Commission must be notified. The Commission's guidance "How to close a charity" sets out the steps.

Why don't more charities merge?

The barriers are cultural, practical, and financial. Culturally, merger is perceived as loss of identity and autonomy — boards resist giving up "their" charity. Practically, merging two charities involves harmonising governance structures, employment terms, property arrangements, and restricted funds, all of which require professional advice that many charities cannot afford. Financially, there is almost no dedicated funding available for merger processes. Eastside People has identified funder reluctance to fund transition costs as a critical gap.

Can the Charity Commission force a charity to close?

The Commission has powers to remove charities from the register for persistent regulatory default (typically failure to file annual returns) and can institute inquiries into mismanagement. Under the Charities Act 2011, it can make schemes to apply cy-pres doctrine where a charity's purposes have become impossible or impractical. However, the Commission does not routinely force operational charities to close on viability grounds alone, preferring to support and advise trustees rather than impose closure.

What happens to a charity's assets when it closes?

When a charity is wound up, its remaining assets must be transferred to one or more charities with similar objects, unless the governing document provides otherwise. This requirement ensures that charitable assets remain within the sector. For charities with restricted funds, the restrictions follow the money to the receiving charity. The Charity Commission can make schemes to direct asset transfer where necessary.

Is it better to merge or close?

It depends on the circumstances. Merger makes sense when two organisations have overlapping objects and geographies, and where combining resources would strengthen service delivery. Closure is more appropriate when the charity's mission has been achieved, the need it was created to address no longer exists, or the organisation is too weak to be an attractive merger partner. In either case, the priority should be protecting beneficiaries and ensuring charitable assets continue to serve their intended purpose.

Key sources and further reading

• Charity Commission Annual Report and Accounts 2022-23 — Charity Commission, 2023. Includes data on charity removals from the register and registration volumes.

• Charity Commission Annual Report and Accounts 2023-24 — Charity Commission, 2024. Updated figures on registrations, removals, and register maintenance activity.

• How to close a charity — Charity Commission. Guidance on the legal and practical steps for winding up a charity, covering different legal structures.

• Collaborative working and mergers: an introduction (CC34) — Charity Commission. Guidance for trustees considering collaborative working or merger, including when and how to notify the Commission and the use of vesting declarations under the Charities Act.

• Charities Act 2022 — legislation.gov.uk. The amending Act that introduced simplified merger provisions, updated vesting declaration procedures, and other governance reforms.

• Eastside People (formerly branded Eastside Primetimers) — eastsidepeople.org. A leading UK advisory firm on charity mergers, partnerships, and closures, and publisher of the annual Good Merger Index. Their published research on merger barriers and recommendations for sector infrastructure is the most detailed available.

• Lloyds Bank Foundation — lloydsbankfoundation.org.uk. Research and commentary on small charity sustainability, including work on when and how organisations should consider winding down.

• UK Civil Society Almanac — NCVO. Annual data on the size, structure, and income distribution of the charity sector in England and Wales.

• Charities at risk of financial distress: group case report — Charity Commission, 2018. Case report examining a cohort of larger charities in financial distress and the trustee decisions that shaped their outcomes.