The Consolidation Wave

15 significant foundation mergers announced 2023-2024—triple the previous decade's average. Smaller foundations merging into larger entities or ceasing operations.

Recent Major Mergers:

• Three regional community foundations merged into single £85M entity (2024)
• Two education trusts combined operations (combined £40M assets, 2024)
• Four small family trusts consolidated into managed fund structure (2023)
• Major health foundation absorbed two smaller specialist funders (2024)

Why Foundations Are Merging

1. Governance Pressures

Charity Commission requirements intensifying. Small foundations (under £1M assets) struggle to maintain compliant governance structures with volunteer trustees.

2. Operational Efficiency

Shared back-office functions, grant management systems, due diligence processes reduce overhead from 25-30% to 12-18%—more money for grants.

3. Strategic Impact

Larger consolidated entities can fund bigger, longer-term programmes impossible for individual small foundations.

4. Trustee Succession Crisis

Family foundations struggling to recruit next generation trustees. Merger with professional management structure solves succession problem.

What Happens When Foundations Merge

Immediate Impact (Months 1-6):

• Grant-making often paused 3-6 months during transition
• Existing multi-year commitments honored
• Annual grants may not be renewed during review
• Application processes suspended

Medium-Term (Year 1-2):

• New strategy published combining priorities
• Often broader geographic reach
• Larger grant sizes available (pooled assets)
• Single application process replaces multiple

Long-Term (Year 3+):

• Fewer but larger grants
• Professionalized assessment (higher bar)
• Strategic programmes replace responsive funding
• Partnership/consortium grants favored

Winners and Losers

Who Benefits:

• Established organizations with track records
• Projects requiring £100K+ funding
• Organizations capable of partnership working
• Those with sophisticated evaluation capacity

Who Loses:

• Very small local groups (under £50K income)
• Those seeking micro-grants (under £5K)
• New/emerging organizations
• Niche/specialist work not aligned to merged strategy

Case Study: Regional Foundation Consolidation

Before Merger (3 separate foundations):

• Total assets: £85M
• Combined grants: £3.2M annually
• Average grant: £8,500
• Total grants awarded: 375 annually
• Geographic focus: Each foundation served one county

After Merger (consolidated entity):

• Same assets: £85M
• Annual grants increased: £3.8M (lower overhead)
• Average grant: £25,000 (nearly 3x higher)
• Total grants awarded: 152 annually (60% fewer)
• Geographic focus: Entire region (3 counties)

Net effect: More total funding, fewer recipients, higher grant values, broader geographic reach.

Strategic Response for Grant Seekers

If Your Funder Announces Merger:

1. Check multi-year commitments: Are you guaranteed continued funding?
2. Don't panic if annual: Contact funder about transition plans
3. Diversify immediately: Assume this funder unavailable 6-12 months
4. Monitor new strategy: Watch for merged entity's priorities announcement
5. Build relationships: Introduce yourself to new leadership team

Broader Portfolio Strategy:

Don't over-rely on small foundations: Vulnerable to consolidation/closure
Build mix of sizes: 3-4 major funders (£50K+), 5-6 medium (£10K-£50K), several small
Track merger rumors: Trustee changes, strategic reviews often precede announcements
Strengthen capacity: Consolidated funders favor professional organizations

Future Outlook

Consolidation likely to accelerate:

✓ 2025-2027 projection: 40-50 additional mergers expected
✓ Small foundations most vulnerable: Under £5M assets, volunteer trustees
✓ Geographic consolidation: Multiple local foundations → regional entities
✓ Thematic consolidation: Specialist funders merging around shared causes

Key Takeaways

✓ 15 major foundation mergers in 2023-2024 (trend accelerating)
✓ Merged foundations typically pause grant-making 3-6 months
✓ Post-merger: fewer grants, larger sizes, higher professionalization bar
✓ Small local organizations most negatively affected
✓ Established organizations with £100K+ capacity benefit
✓ Expect 40-50 more mergers by 2027
✓ Strategic response: diversify, strengthen capacity, build relationships