The star has given the full amount of his £25k honor cash to the MVT, which functions to protect the UK's small concert spaces.
He was given the prize on 16 October as his new release his work was chosen as the outstanding release of the past year.
The musician has chosen to give the cash to the Music Venues Trust, in recognition of the vital role small stages fulfilled in his early career.
"I wouldn't be doing this success if it hadn't been for all the performances I played around the area, and further afield, when I was starting out," stated the artist. "These venues are legendary, but they are in difficulty."
Since the start of 2023, more than 150 of these venues have permanently closed – approximately one-sixth of the whole industry in the UK.
Recently, well-known musicians like the band Pulp, the group Coldplay, Katy Perry and Ed Sheeran have all supported the Music Venues Trust in its efforts to support the industry, by adding a small levy to their admission fees, which supports local stages.
Fender also joined in, raising more than £100,000 on his live tour to support 38 small stages across England, Scotland, and Wales.
The money assisted spaces that were dealing with potential shutdown due to challenges stemming from flooding, fires and family tragedies, as well as regulatory hurdles, court cases and noise complaints.
Additional spaces received monetary aid in improving amenities and technical equipment that positively impacted artists and audiences.
"The notion that funds from shows in big venues helps the local stages, where it begins for musicians like me, is just logical," Sam Fender has commented.
The musician is not the first artist to contribute his Mercury Prize prize money to charitable organizations.
Back when Pulp received the award in the mid-90s for their release their work, lead singer Cocker announced that the band would donate their winnings to the charity War Child.
During 2002, musician Ms Dynamite divided her prize among several charities, such as the NSPCC and a Sickle Cell organization.
"And I donated a £1,000 to my local community centre, to their gymnastics class, because I did gymnastics when I was growing up and they lacked new equipment," she shared with a publication.
Two years ago, Ezra Collective gave their funds to the community center that nurtured their group, alongside other independent music bodies.
Also winners that year the group contributed their award to a charity for MS after a close contact was diagnosed the condition.
"The victory was ample," said singer Heather Small. "The prize was the cherry on top but we didn't require the bonus, because we had the cake. So our victory touched somebody else's life."
Last week, the Music Venues Trust announced it had protected a couple of small stages in that region, by transferring them to community ownership.
The first in that area and the second in the city were purchased under the public acquisition initiative, which is backed by the arts council and enthusiasts who buy "ownership units" in the venues.
