I'm a trustee of a charity with a £1m annual turnover and we just about make ends meet each year (ie all the income we get in from funding sources is spent on delivering services). We're probably classed as a small local charity as we work in a small geographic area but run a number of specialised services.
We employ someone to run the organisation on a £50k annual salary and also have dedicated project leaders, specialised staff as well as a lot of volunteers.
Without our dedicated and professional salaried staff team (who to be honest are underpaid & many go above and beyond on a daily basis to help our clients) we couldn't run the services we deliver.
In order to have such a team we have to run a payroll, sort out pensions, tax, childcare vouchers, insurance, health & safety, training, professional accreditation etc because we want our employees to be happy, safe, valued and we want to deliver a professional service to our clients and are obliged to do certain statutory or charity commission things eg annual audit, tax, accounts etc
We also run a building and have to meet the costs that incurs as well as finding the time/costs to fundraise.
So for every person we help on the front line there's a whole back office service to be funded. Without that function there is no front line service.
The third sector has been hammered by the current public sector cuts and is trying hard to continue to deliver services to those in need. Despite the cuts in funding and the need for us to scale back accordingly the need for our services doesn't go away.
I think there are some charities which have got big with massive admin costs to meet, but I definitely think those are the exception.