If every generous benefactor stopped giving hundreds of pounds every month and decided instead to give their time and energy to a charity, cutting back their work hours and therefore earning less, would the charities benefit more or less?
Interesting question - Very difficult to say. There is a massive lack of skilled volunteers, especially in finance and IT, but most charities that struggle to pay for these services don't need a lot of top level execs. They need skills at middle management level (e.g. set up and monitor accounting processes, build a mobile compatible website etc.) These are the people that are most likely to be time strapped and least likely to have a lot of time to volunteer. Personally, as a funder, I don't like medium sized charities (US$1m +) that rely on volunteers for key positions because there's an inherent lack of accountability. It's like pro-bono. It's great but at the same time, the pro bono client is always the last priority. Once charities get beyond a certain size, they have to be more professional. You can't just say "Oh we filed late because [big 4 accountancy firm] didn't have the capacity to sign off"
Also, it's simplistic to say "work fewer hours, earn less"- with many high paying jobs there isn't a PT option. It's do it, or don't do it. There is an increasing trend for second careers in the NGO sector amongst people who have made a packet and retired in their forties. Some are extremely effective (John Wood from Room to Read for example) due to the expertise, strategic focus and attention to governance that they bring with them. Others less so. The thing about people who have worked at the highest level is that they are basically not interested in doing the hands on stuff- they're mainly interested in strategy and driving sector wide change.
Re admin costs, some charities take the piss. That's clear. However, I'm always very cautious of "every penny goes to the beneficiaries" especially in disaster response situations. When the Filipino typhoon happened, loads of HK expat wives who think they know best slagged off the big charities and did a huge "in kind" drive and shipped it themselves. They were shipping dried noodles to the Philippines FGS. Then it all sat in an aircraft hangar at Manila airport and rotted because there was no logistical support (surprise!). My favourite quote was "But what use is money?". The thing about big organisations like The Red Cross is that they have tents and trucks and, critically, relationships with governments and local companies and the military. You cannot underestimate the importance of relationships, especially in international development work.
Anyway, in my work and personally, my preference is for well established mid-sized charities with proven impact (not outputs) and a strategic CEO who are looking to scale in a cost effective way.