In order to get exceptional value for money you need to (correctly) believe that you are smarter than the big donors - >otherwise they'd already have funded whatever you're planning on funding to the point where the returns diminish to the >same level as everything else.

That's if you think that the big funders are rational and have similar goals as you. I think assuming they are rational is pretty close to the truth (though I'm not sure: charity doesn't have the same feedback mechanisms as business, because if you get punished you don't get punished in the same way). beoShaffer suggests that they just have different goals - they are aiming to make themselves look good, rather than do good. I think that could explain a lot of cases, but not all - e.g. it just doesn't seem plausible to me for the Gates Foundation.

So I ask myself: why doesn't Gates spend much more money on increasing revenue to good causes, through advertising etc? One answer is that he does spend such money: the Giving Pledge must be the most successful meta-charity ever. Another is that charities are restricted in how they can act by cultural norms. E.g. if they spent loads of money on advertising, then their reputation would take a big enough hit to outweigh the benefits through increased revenue.