The artist has given the entirety of his £25k award cash to the Music Venues Trust, which functions to protect the UK's small live music spots.
He was awarded the prize on 16 October as his new release People Watching was named the best record of the past year.
The musician has opted to hand the money over to the MVT, in recognition of the essential function small stages had in his beginning days.
"I personally wouldn't be doing what I am doing today if it weren't for all the performances I played around the area, and further afield, when I was starting out," remarked Fender. "These venues are iconic, but they are facing challenges."
Beginning in 2023, over 150 of these venues have ceased operations – approximately 16 percent of the entire UK sector.
In the last year, top acts like Pulp, Coldplay, Katy Perry and Ed Sheeran have all aided the MVT in its efforts to support the industry, by including a minor surcharge to their admission fees, which benefits smaller concert halls.
Sam Fender also participated, raising in excess of £100,000 on his 2024 arena tour to support 38 grassroots venues across the UK.
These funds assisted venues that were facing potential shutdown due to difficulties arising from flooding, blazes and family tragedies, as well as licensing issues, conflicts and noise complaints.
Other venues obtained monetary aid in improving infrastructure and gear that directly benefitted performers and concertgoers.
"The concept that funds from performances in large arenas supports the smaller venues, where it all starts for performers like me, is just logical," the star has stated.
He is not the first artist to contribute his Mercury Prize prize money to worthy causes.
In Pulp received the trophy in the mid-90s for their record their work, vocalist Jarvis Cocker declared that the act would contribute their prize money to the charity War Child.
That year, rapper and singer the artist shared her prize among a few organizations, like the children's charity and a Sickle Cell charity.
"And I donated a £1,000 to my local community centre, to their classes, because I trained in gymnastics when I was younger and they needed better apparatus," the artist explained to a publication.
Previously, the band gave their prize money to the local youth club that nurtured their group, as well as other independent music bodies.
And 1994 winners the group donated their award to a MS organization after a close contact was found to have the illness.
"The victory was quite enough," remarked singer Small. "The money was the bonus but we could do without the cherry, because we had the honor. So our victory affected somebody else's life."
Last week, the MVT announced it had saved a couple of grassroots venues in the South East, by transferring them to local control.
The first in Southampton and The Croft in the city were bought under the community ownership initiative, which is backed by a national body and supporters who buy "ownership units" in the properties.
