The star has given the full amount of his £25,000 award cash to the Music Venues Trust, which functions to save the Britain's grassroots live music spots.
Fender was given the award on October 16 as his third album People Watching was declared the best record of the past year.
Fender has decided to donate the funds to the MVT, in appreciation of the crucial part grassroots venues fulfilled in his beginning days.
"As an artist couldn't be pursuing what I am doing today if it wasn't for all the gigs I played around the North East, and beyond, when I was beginning," stated Sam Fender. "These locations are iconic, but they are in difficulty."
Since the start of 2023, more than 150 of these locations have shut down – roughly 16% of the whole industry in the UK.
Recently, major artists including Pulp, the group Coldplay, Katy Perry and Sheeran have all backed the Music Venues Trust in its efforts to support the industry, by adding a minor surcharge to their ticket prices, which benefits independent venues.
Fender also participated, generating over £100k on his live tour to assist numerous grassroots venues across England, Scotland, and Wales.
The donation assisted venues that were confronting imminent closure due to difficulties caused by flooding, blazes and bereavements, as well as regulatory hurdles, court cases and noise complaints.
Other venues received funding support in upgrading amenities and technical equipment that directly benefitted musicians and audiences.
"The concept that money from shows in major spaces backs the local stages, where it begins for musicians like me, is just common sense," Fender has said.
The musician is among several artists to contribute his Mercury Prize prize money to charitable organizations.
Back when the band received the award in 1996 for their album their work, frontman Jarvis Cocker stated that the act would contribute their cash to the organization the charity.
That year, rapper and singer she shared her bounty between several organizations, such as the NSPCC and a charity for Sickle Cell.
"Additionally, I donated a grand to my local community centre, to their gymnastics program, because I practiced gymnastics when I was growing up and they needed better apparatus," Ms Dynamite explained to outlets.
Previously, Ezra Collective contributed their winnings to the local youth club that nurtured their group, as well as other local music groups.
Additionally the 1994 recipients they donated their winnings to a multiple sclerosis charity after a close contact was identified with the condition.
"The victory was ample," remarked vocalist Small. "The prize was the cherry on top but we didn't need the cherry, because we had the cake. So our success impacted somebody else's life."
Last week, the MVT announced it had protected a couple of small stages in south-east England, by placing them under community ownership.
The Joiners in Southampton and the other in Bristol were purchased under the Own Our Venues initiative, which is backed by the arts council and supporters who acquire "stakes" in the properties.