Last week the Computer Software Group announced its acquisition of Care Business Solutions, which supplies fundraising, membership and CRM software to charities including WWF-UK, Cancer Research UK and the RSPCA.
The Computer Software Group said it would form "the largest single force in the UK membership and charities market", with a customer base exceeding 250 membership and fundraising bodies.
But Graham Cornell, chief operating officer at Rivington Street Software, which has 22 not-for-profit sector clients, said the acquisition was bad news for the consumer.
"The takeover cuts choice for non-profit bodies," he said. "Just as with other takeovers in the past two years, this is CSG removing competition and depriving customers of choice.
"This does not benefit the customer as it removes the flexibility that the smaller and less rigid firms offer to not-for-profit enterprises."
The software market for charities has been subject to consolidation in recent years, with both Microsoft and Sage buying up software providers.
Microsoft has bought Solomon and Great Plains, while Sage now commands about 40 per cent of the charity market.
John Tate, chairman of the Citra IT alliance, which includes the Charity Finance Directors' Group and the Charities Consortium IT Directors' Group, said: "If the Computer Software Group focuses each of its products on a different part of the sector, it would potentially have a stable of products that would do different things for different people.
"If that is managed well, the users would continue to have the choice they had before. But there is a danger that CSG won't invest in the products and instead profit from the user bases - in that case, users could suffer."
Simon Fowler, managing director of the not-for-profit division of Computer Software Group, said: "All we are trying to do is make sure that we have a portfolio of solutions for the not-for-profit sector so that if any organisations goes out to the market, we will have at least one solution that fits their needs. There will be no lack of choice whatsoever."
Writing in Third Sector this week, Peter Gotham, chair of the charities group at the Institute of Chartered Accountants, says smaller charities face "real problems in getting software to deal with the complexities of their accounting".
He says there has been little improvement in the software available to charities in recent years, with some leading software "a long way short of what is required".
- See Focus Finance and Governance, page 21.