The star has donated the complete sum of his £25k honor cash to the Music Venues Trust, which works to preserve the Britain's grassroots live music spots.
Fender was given the prize on October 16 as his latest record the album was named the outstanding release of the last 12 months.
Fender has decided to donate the funds to the trust, in acknowledgment of the vital role local spots fulfilled in his beginning days.
"I personally couldn't be pursuing what I am doing today if it wasn't for all the gigs I did around the North East, and further afield, when I was starting out," said Fender. "These venues are legendary, but they are struggling."
Beginning in 2023, at least 150 of these venues have ceased operations – about 16% of the whole industry in the UK.
Recently, major artists including the band Pulp, the group Coldplay, Katy Perry and Sheeran have all supported the MVT in its attempts to keep the scene afloat, by applying a minor surcharge to their ticket costs, which benefits local stages.
Fender also participated, raising in excess of £100,000 on his live tour to assist thirty-eight grassroots venues across the UK.
The donation supported spaces that were facing possible closure due to challenges arising from water damage, blazes and family tragedies, as well as licensing issues, court cases and sound issues.
Additional spaces obtained funding support in improving infrastructure and technical equipment that positively impacted artists and concertgoers.
"The concept that funds from shows in big venues helps the smaller venues, where it kicks off for musicians like me, is just logical," Fender has commented.
He is far from the only musician to donate his Mercury Prize funds to charitable organizations.
Back when they won the prize in the mid-90s for their record the album, vocalist Jarvis Cocker declared that the band would donate their winnings to the charity War Child.
During 2002, musician she divided her bounty across several charities, including the children's charity and a Sickle Cell charity.
"And I gave a thousand pounds to the center, to their gymnastics class, because I did gymnastics when I was a child and they needed better apparatus," she explained to outlets.
Two years ago, they contributed their winnings to the youth organization that supported their act, as well as other grassroots music organisations.
And winners that year the group donated their award to a multiple sclerosis charity after a friend was identified with the illness.
"Receiving the award was ample," remarked vocalist Heather Small. "The prize was the extra but we didn't require the bonus, because we had the honor. So our winning affected another person's life."
In the past week, the Music Venues Trust announced it had protected two local spots in south-east England, by placing them under community ownership.
The Joiners in the city and The Croft in the city were bought under the Own Our Venues scheme, which is funded by the arts council and supporters who purchase "shares" in the buildings.