The star has handed over the full amount of his £25k award winnings to the Music Venues Trust, which operates to save the Britain's independent music venues.
He was given the prize on mid-October as his latest record People Watching was named the best record of the last 12 months.
Fender has opted to give the cash to the Music Venues Trust, in recognition of the vital role local spots had in his early career.
"I personally couldn't be pursuing what I am doing today if it hadn't been for all the shows I played around the area, and beyond, when I was starting out," remarked Fender. "These venues are legendary, but they are facing challenges."
Beginning in 2023, over 150 of these venues have ceased operations – about 16% of the whole industry in the UK.
In the last year, major artists such as Pulp, the group Coldplay, Katy Perry and Ed Sheeran have all supported the Music Venues Trust in its attempts to keep the scene afloat, by applying a minor surcharge to their admission fees, which benefits independent venues.
Sam Fender also joined in, generating over £100k on his recent tour to help 38 local spots across Britain.
The money supported spaces that were confronting possible closure due to issues stemming from floods, blazes and family tragedies, as well as regulatory hurdles, legal disputes and noise complaints.
Other venues were granted funding support in upgrading facilities and sound and lighting systems that positively impacted artists and audiences.
"The concept that money from performances in major spaces helps the local stages, where it kicks off for artists like me, is just common sense," Sam Fender has stated.
He is not the first artist to donate his Mercury Prize winnings to good deeds.
Back when Pulp received the prize in 1996 for their album Different Class, frontman Cocker stated that the act would give their winnings to the organization War Child.
During 2002, rapper and singer she split her prize among several charities, like the NSPCC and a Sickle Cell organization.
"I also gave a grand to Highgate Newtown, to their gymnastics program, because I did gymnastics when I was growing up and they lacked new equipment," Ms Dynamite told outlets.
Previously, Ezra Collective gave their prize money to the local youth club that developed their act, alongside other grassroots music organisations.
Additionally 1994 winners M People contributed their award to a multiple sclerosis charity after a friend was found to have the condition.
"Receiving the award was sufficient," remarked singer Heather Small. "The money was the cherry on top but we didn't need the extra, because we had the main prize. So our success touched the lives of others."
Last week, the Music Venues Trust revealed it had saved several grassroots venues in the South East, by placing them under community ownership.
One venue in that area and the other in the city were purchased under the public acquisition initiative, which is backed by the arts council and enthusiasts who buy "shares" in the properties.