The Partnership Council, which runs projects giving unemployed people volunteering placements and regenerating run-down public spaces, and the Castle Cavendish Foundation, which owns properties in the city that are primarily rented out to local community groups, are planning to form one organisation in early April.
The merged organisation will use the CCF's revenue to help fund the work of the Partnership Council, which is mostly funded by government grants.
Ruth Greenberg, the chief officer of the Partnership Council, said the organisation's government income of £400,000 will be cut by 35 per cent.
"It's a difficult time for charities, especially going into the new financial year," she said. "It makes sense to share our resources."
The new organisation will be based at the Partnership Council's office in Tennyson Hall in Radford, which is owned by the CCF. The council has 16 employees who will be combined with the CCF's three paid staff without any job losses, Greenberg added.
She said deciding on a name for the new organisation and selecting its chief executive would be the first actions of the new board when the charity is established in early April.