The artist has given the entirety of his £25k award cash to the Music Venues Trust, which operates to protect the Britain's small live music spots.
Fender was presented with the prize on 16 October as his latest record his work was named the best record of the past year.
He has chosen to give the cash to the MVT, in recognition of the essential function small stages had in his initial steps.
"As an artist couldn't be pursuing this success if it hadn't been for all the shows I did around the area, and further afield, when I was beginning," stated the artist. "These spaces are iconic, but they are facing challenges."
Beginning in 2023, over 150 of these venues have ceased operations – about 16% of the total UK scene.
Over the past year, major artists such as the band Pulp, the group Coldplay, Katy Perry and Ed Sheeran have all supported the trust in its efforts to keep the scene afloat, by adding a modest fee to their ticket costs, which supports local stages.
Sam Fender also joined in, generating over £100k on his recent tour to help thirty-eight small stages across England, Scotland, and Wales.
The money assisted spaces that were facing imminent closure due to difficulties stemming from flooding, fires and bereavements, as well as permit problems, legal disputes and noise complaints.
Some locations obtained financial assistance in improving amenities and sound and lighting systems that positively impacted artists and concertgoers.
"The idea that funds from concerts in major spaces helps the independent spots, where it kicks off for performers like me, is just sensible," the star has commented.
He is far from the only musician to donate his Mercury Prize funds to worthy causes.
In Pulp earned the prize in the year 1996 for their record the album, vocalist Cocker announced that the band would give their prize money to the charity War Child.
That year, rapper and singer Ms Dynamite split her prize among multiple organizations, such as the NSPCC and a Sickle Cell charity.
"And I donated a grand to Highgate Newtown, to their classes, because I practiced gymnastics when I was growing up and they lacked new equipment," she told a publication.
In recent years, Ezra Collective donated their winnings to the local youth club that supported their group, alongside other independent music bodies.
Also 1994 winners the group contributed their prize to a MS organization after a friend was found to have the disease.
"The victory was ample," said artist Small. "The cash was the cherry on top but we didn't need the cherry, because we had the cake. So our victory touched the lives of others."
In the past week, the Music Venues Trust revealed it had saved two small stages in the South East, by bringing them into community ownership.
One venue in Southampton and the other in the city were bought under the community ownership scheme, which is funded by Arts Council England and supporters who acquire "shares" in the properties.
