That is by Scott MacLennan over on Bill Easterly's Aid Watch blog. Read his short post - it is central to why we started GlobalGiving.
Only small NGOs it seems are able to actually get out in the field and get their hands dirty making things happen. Past a certain size (what is that size?) the demands for official looking papers, reports, audits and the like overshadow the demand to actually provide aid. Large donors are just too caught up in the appearance of good business and good government. Form without substance.