Council chief executive David Crosbie said charities needed to consider merging or collaborating to make the sector stronger, especially in the case of "federated" charities, which existed at state and national levels.

"[The industry] has been able to grow on the back of increased giving, increasing government funding and increased capacity to raise money from fees and charges and ticket prices."

But, he said, all that was stalling.

It was becoming harder to justify "federated" charities, Mr Crosbie said.

"Sometimes the competition between organisations sharing the same name is as fierce as competition outside of those organisations.

"It just makes very little sense unless you can justify it in some way."

He said there were hundreds, if not thousands, of Australian charities set up this way.

One of those is the Cancer Council, which has a chief executive and board in each Australian state and territory, as well as at a national level.

Cancer Council Australia CEO Professor Sanchia Aranda agreed that greater collaboration in the charity sector leads to improved efficiencies and economies of scale, especially among organisations with a shared focus.

But, she said, the Cancer Council's federated model continued to serve communities well.

"Cancer Councils are able to leverage state, territory and local relationships and arrangements, while having a shared national focus as the only not-for-profit in Australia involved in every facet of cancer control for every cancer type," Professor Aranda said.

But she said the charity also shared resources.

"Our national services and resources, such as our 13 11 20 information and support hotline and a suite of national publications, are supporting our mission Australia-wide. We also share pro-bono legal and financial services and have a national competitive research grants program.

"Cancer Council operates as a cohesive federation and is continually exploring new efficiencies."

Mr Crosbie said the merging of charities did not necessarily mean services were compromised, because they would spend less duplicating infrastructure.

"Just because you don't have your own CEO doesn't mean you can't be close to the community and provide very good services. There's not many other sectors that insist on having separate governance structures," he said.

But he admitted the warning and accompanying advice for charities to merge or collaborate would be controversial.

"Sometimes it's important to step back and say, well what are you here for, what are you trying to do? What would be best for this community? It's not always just running your programs and services.

"Those are hard discussions to have with charities who have been able to grow year on year on year.

"It's a bit of a crunch point."