Why so many small charities?

First, focus and drive to scale is very important. The "dream" as a small charity is to figure out how do your  one thing well (give mosquito nets, give money, incentives for vaccines ets.) then iterate, replicate and scale up. Bigger charities don't think that way and are comfortable just to "add" and "maintain" programs rather than drive hard for impact and scale. I doubt bigger charities would have the focus and drive to scale new initiatives compared to founders of small charities which have more energy and where the sky is the limit.

Second, new small charities can be lean  (bit of a cliche). On the other hand many big charities actually become more inefficient as they get bigger (I'm sure there are many exceptions) and already ogten have "locked in" many inefficiencies. My evidence for this is that the classic big charities which do lots of things (oxfam, save the children, world vision etc.) are some of the least efficvient charities around.

 Unfortunately as charities scale up, its often the opposite of business. You don't gain much from economies of scale, instead you add lots of middle management and each "unit-of-good" can become more expensive than it was when you were a smaller charity. I'm even struggling with this situation a bit with our charity at the moment.

I actually think the opposite should often be the case, bigger charities could split up or downsize, in order to focus on the one thing they are best at.

I'm talking mainly about the GHD space here by the way, don't know anything about animal charities.

I've written about this kind of thing a bit more here.

https://ugandapanda.com/2021/02/04/ngos-should-only-do-one-thing/

I think we have the exact opposite problem. When I see the budget of many big EA orgs I throw up in my mouth, thinking about how many smaller charities the money could have funded.

Maybe I'm wrong. Got any evidence that larger EA orgs are most cost effective then smaller ones?

Joey has answered this before elsewhere (i.e. why doesn't CE just open programs instead of spin-off charities). The answer is that starting a chair leads to more ownership and thus better results.

I'd also add that many programs in one charity raises the stakes of the leadership's judgement/decision-making. More charities in a way acts like diversification.