Most already do, but that's actually a problem for most charities, since they can't figure out how to scale or operate more efficiently because their budget is tied so directly to services.
For more than this, see the reasoning and extensive examples in Ken Stern's book With Charity For All. I wrote about it here: http://blog.seliger.com/2013/06/02/with-charity-for-all-ken-... , and anyone interested in how the charitable subset of nonprofits actually operate should read the book.
(I'm a consultant who does grant writing for nonprofit and public agencies and have heard a million laments on this issue.)
Dan Pallotta: The way we think about charity is dead wrong
http://www.ted.com/talks/dan_pallotta_the_way_we_think_about... (20 min video)
> nonprofits [...] are rewarded for how little they spend
> -- not for what they get done
http://www.econtalk.org/archives/_featuring/dan_pallotta/ (1 hr EconTalk podcast)
> The use of overhead as a measure of effectiveness makes it difficult for
> charities to attract the best talent, advertise, and invest for the future
http://amzn.com/B003BLY740 ($15 340 pg. Kindle book)
> double-standards place the nonprofit sector at extreme disadvantage to
> the for profit sector on every level
In addition, it's prestigious / sexy to see a staff person handing food over to someone, or providing an ear exam to a kid, or whatever. It's not sexy to get a functional CRM or logistics manager or whatever.
> It's important to remember that a 'high overhead' though,
> does correlate to bad performance.
In the sciences, high overhead (as charged on top of grants given by taxpayer-funded organizations such as NIH, NSF, DOE) inevitably means questionably high payouts to the executive-level presidents, and what not. Now that I know how to read 990s, I am looking through the history of a particular nonprofit science research org; 10 years ago it was entirely run off of its endowment and had a promise to the researchers of independence from the tyrrany of grants. Over the course of the decade, the active scientist corpus has shrunk by 3/4, the president gets paid 3x more, the endowment is < 20% of what it used to be, and PIs are being pushed to apply for soft money, and they are negotiating overheads of 60% or more.
Then there are spectacularly bad organizations such as the Harlem Boy's Choir, which I have no personal experience with, but certainly serve as cautionary tales.