Crumbled I agree that the merrygoround exists, although I dont agree that all charities are involved in it. It largely concerns internationally focused NGOs that are linked in to the UN/ national government network. In this area, government relationships are paramount so unsurprisingly you get a lot of cross-pollination 
My personal view is that donors have a very important role to play in keeping charities honest- many individual donors just hand over cash with little or no thought to impact, efficiency etc, so is it any wonder that the charity sector has its problems? If my boss paid me and never asked to see any of my work, I'd probably be a bit less diligent than I am.
On that note, here are my thoughts on how to maximise bang for buck for individual donors
Avoid DR - Yes, the news story of the disaster zone is compelling and you sleep that bit better for sending #20 to the TV appeal BUT Disaster recovery is always going to be an inefficient use of funds because you get a huge amount of "heart money"/ unrestricted cash pouring into a country at a time of huge logistical disruption, when local grassroots organisations are totally overwhelmed and there is an influx of international organisations/volunteers who mean well but are not necessarily au fait with the locality. It's not conducive to well thought out initiatives, impactful projects and efficient spending. There is always a lot of waste due to supplies not getting where they are supposed to be, "diversion" of money etc. Some of this is essentially criminal (ie. people taking advantage of the chaos to nick stuff) but most is just sheer inefficiency/ poor communications/lack of infrastucture etc. If you want to donate, wait. The most impactful projects happen once the situation has been stabilised.
Don't be put off by UK charities that are partly government funded. There's a lot of confusion around this issue. Many UK charities working in the social services field (e.g providing advocacy to people with learning disabilities) are contracted by the local authorities to provide that service to their residents. This is called "commissioning of services". The contracts are tendered and the grants are strictly monitored and restricted (charities have to provide detailed budgets on how they intend to provide the service, commit to certain performance metrics etc.). The government doesn't just dish out cash to charities and ask for nothing in return. Therefore, charities that are receiving government grants on an ongoing basis would have to meet reasonable levels of good governance and grant execution ability.
Go Direct: The more organisations in a funding chain, the less money gets to the final beneficiary. My advice to individual donors is "don't fund funders" i.e. direct your donations to charities that actually carry out the work because then you get better transparency and control over your donation. You need to do a little homework around this - Some charities (even large ones) run all their own projects. Some charities, especially UK charities that work primarily overseas, execute largely through local partners (i.e. they are program funders rather than program operators). Sometimes there is a good reason for this (local regulations etc.) but as a donor, my advice is that if you want to fund a specific country, find a good local NGO and back them directly.
That said, Go Local: The foundation I work for only funds "operating charities" and we fund all projects locally (ie. if we fund within a country, we have a grants officer there). I think this is important because we have eyes on the ground, we can do much better due diligence and we understand the cultural context. Obviously, most individual donors dont have this luxury, so (controversially) I would advise them to donate in their home country. There is a huge amount of need in the UK and some great projects being done at local level, and also by national charities. You, as a donor, understand the context, whereas with other countries what appears a great cause/need may actually not be- e.g. In China, huge amounts of money were poured into building very basic schools in rural areas (as an aside, many of these were built by volunteers and were not great quality). A few years later the government knocked them all down, consolidated school districts and built new ones. Moreover, the root problem in China re rural education was never the lack of buildings- it was (and still is) a lack of maintenance, lack of books and lack of skilled teachers, plus the draw of paid employment which means kids drop out. You need to understand the issue to know if an initiative is going to solve it.
Anyway, this is long, but I just wanted to get across the point that the charity sector has its issues for sure, but that doesnt mean to say that the whole sector is one big gravy train of scumbags. There are a lot of people doing some very good work, and they may not always be the people that come across as "carey-sharey". As I said upthread, treat donations as an investment and not a gift. Donors have a role to play in keeping charities honest. No-one has to support a specific charity. make sure the ones you support deserve it.