A consortium set up to deliver public sector contracts and the local council for voluntary service in Wakefield, Yorkshire, have agreed to merge.
Wakefield District Wellbeing Consortium, which was set up three years ago to win public sector contracts and has an income of about £400,000 a year, has legally taken over Voluntary Action Wakefield District.
VAWD turned over £208,000 in the year to the end of March 2012, but its income had fallen rapidly from more than £1m two years before.
Alison Haskins, chief executive of the consortium, said that despite being legally a takeover, the process was in reality a merger.
She said the two organisations were still integrating but there would eventually be a new, combined organisation called Nova, which would operate from the VAWD offices.
"We will provide service delivery, voice and advocacy, and organisational development," said Haskins. "But we will outsource much more of the development work to our members. We want to help them more systematically with their needs."
Haskins has not been confirmed as chief executive of the newly merged organisation, but the VAWD currently has no chief executive. She said no redundancies had been confirmed.
She said the decision to merge had been based on the need to provide better services to voluntary organisations.
"We recognised that there were several infrastructure bodies in Wakefield and it was getting a bit confusing," she said.
Haskins said that merger talks had initially involved another consortium, Young Lives, which works specifically with young people, but that it had decided not to merge for the moment.
"However, we will clearly describe how we work together and might decide to merge later on," Haskins said.
Work on the merger has been funded by money from the £30m Transforming Local Infrastructure fund, an Office for Civil Society project designed to develop voluntary sector support services.
Haskins said she was still ambitious to grow the wellbeing consortium into a much larger operation.
"Our ambition is to double the number of contracts we’re providing in the next three years," she said. "At the moment we have 58 members, of which 20 are delivering contracts."