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 Primetimers, the 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, in its 2024 work on small charity sustainability, highlighted that many small charities continue operating not because the need persists but because there is no support structure for a dignified exit. Eastside Primetimers has called for a dedicated fund to support planned closures and mergers, arguing that a well-managed wind-down can protect beneficiaries far better than a slow decline into ineffectiveness.

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 Primetimers, which has advised on more charity mergers than any other UK firm, has consistently noted that only around 50-70 mergers complete each year — a tiny number against a register of 170,000. Their research has identified the key barriers 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: the largest 0.4% of charities (those with income above £10 million) account for around half of the sector's total income. 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 research report on charities approaching insolvency found that trustees frequently delayed seeking help until the organisation was already unviable, and that there was widespread confusion about the legal and practical steps involved in closing a charity. Trustees cited reputational concerns, emotional attachment, and a lack of accessible guidance as reasons for delay.

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 (estimated at £1.4 billion additional cost to the sector), 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 supporting small charities have noted that some organisations are continuing to operate at a level where they can no longer deliver meaningful services, but feel 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: April 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 Primetimers 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 Primetimers 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, and its stated approach is to be an "enabler, not a policeman" on questions of viability.

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 (CC7) — Charity Commission. Guidance on the legal and practical steps for winding up a charity, covering different legal structures.

• Merging charities (CC34) — Charity Commission. Guidance on the merger notification process, the register of mergers, 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 Primetimers — eastside.org.uk. The leading UK advisory firm on charity mergers, partnerships, and closures. 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 approaching insolvency — Charity Commission, 2018. Research report on trustee behaviour and barriers to seeking help when charities face financial difficulty.