Charity Navigatior and many similar sites fixate on unhelpful stats like the percent of the budget "wasted" on admin expenses and overhead to an unhealthy degree. To operate effectively charities need to spend money on high quality leadership and support staff, and while doing good motivates many to accept lower pay they can still be pricey.
Furthermore, the more complicated what the charity is doing the more it generally costs to hire competent employees. If a charity wants to hire employees to rigorously evaluate whether their interventions are working, this will also add to overhead.
More controversially, I think the fixation on charity CEO pay is also misguided. They still generally earn less than they could working for similar non-charitable organizations, and being good at CEO-ing is a difficult skill. Hiring a bad CEO can tank an organization. (It's definitely also possible to spend a lot of money on a bad CEO, it's not a guarantee of quality.)
In fact, higher overhead (a negative factor in Charity Navigator's score) correlates with a better Givewell recommendation.
> The mean of the fundraising expense ratio for charities (the money spent on fundraising divided by the total expenses of the entire organization) that earned a gold, silver, or notable rating by Givewell (41 charities) is 0.073, while that of the charities reviewed by Givewell but not ranked well (253 charities) is 0.054 (p-value of 0.05, i.e., statistically significant at the 95% level). The mean of the administrative expense ratio for charities that earned a gold, silver, or notable rating by Givewell is 0.102, while that of the charities reviewed by Givewell but not ranked well is 0.092 (p-value of 0.35). Adding administrative and fundraising together, the mean ratio for charities that earned a gold, silver, or notable rating by Givewell is 0.174, while that of the charities reviewed by Givewell but not ranked well is 0.147 (p-value of 0.11).
(Note that I weakly suspect this person might be misusing p-values, and should be less confident in the causal nature of this correlation. However, that is still sufficient to prove that overhead isn't inherently evil)
Furthermore, the more complicated what the charity is doing the more it generally costs to hire competent employees. If a charity wants to hire employees to rigorously evaluate whether their interventions are working, this will also add to overhead.
More controversially, I think the fixation on charity CEO pay is also misguided. They still generally earn less than they could working for similar non-charitable organizations, and being good at CEO-ing is a difficult skill. Hiring a bad CEO can tank an organization. (It's definitely also possible to spend a lot of money on a bad CEO, it's not a guarantee of quality.)
In fact, higher overhead (a negative factor in Charity Navigator's score) correlates with a better Givewell recommendation.
> The mean of the fundraising expense ratio for charities (the money spent on fundraising divided by the total expenses of the entire organization) that earned a gold, silver, or notable rating by Givewell (41 charities) is 0.073, while that of the charities reviewed by Givewell but not ranked well (253 charities) is 0.054 (p-value of 0.05, i.e., statistically significant at the 95% level). The mean of the administrative expense ratio for charities that earned a gold, silver, or notable rating by Givewell is 0.102, while that of the charities reviewed by Givewell but not ranked well is 0.092 (p-value of 0.35). Adding administrative and fundraising together, the mean ratio for charities that earned a gold, silver, or notable rating by Givewell is 0.174, while that of the charities reviewed by Givewell but not ranked well is 0.147 (p-value of 0.11).
(Note that I weakly suspect this person might be misusing p-values, and should be less confident in the causal nature of this correlation. However, that is still sufficient to prove that overhead isn't inherently evil)
http://freakonomics.com/2011/06/09/why-ranking-charities-by-...