Rant mode active
People don't make wars, polititians do.. unfortunately the G public will buy any kind of propaganda that the political machine supplies, look at the level of nationalism in the UK now. People always suffer..
At this point, after 8 years of working for various NGO's, it's difficult to figure out what is good and what is bad in this world, if an orphanage has unhappy, unsupported kids, surely, healthcare provision aside, we should do more to help these kids than a poorer well run orphanage. (I can never understand people wanting to help the brightest and best students, when surely the dumbest are the ones who need the help, Maybe I should start my own charity

)
I think ultimately its best if you can avoid giving money if you can. Try to find out what the organisation, centre, or village needs and then work on helping them to get it, you might have to help with some cash at that point, but only after getting some commitment from the recipients. If you are there go to the market with the organisation staff, buy the stuff yourself, ok there is no guarantee that the NGO staffer won't go back to the stall to collect his commission when you are gone, but you did what you could.
Look at supporting orphanages with things like school books, items for personal hygene, clothing, things that you know will benefit the children immediately and directly. Avoid shipping things from other countries, over long distances, import charges and costs have often meant donations get destroyed. Somebody sent us 200 t-shirts, they cost $2 each here, import duty on the shipment was $600...
Orphanages are big business these days, certainly here thet are. I do not believe that the number of children without families who can support them has grown so much in the past 10 years, but that poor families are putting their children into orphanages because their financial load is reduced by doing so and the material quality of life is percieved to be better than at home.
Its sad but
ALL charities and causes are businesses, big and small alike, and need to have cash to sustain themselves. Add to this situation that in poor countries corruption is endemic and most western people have bigger hearts than brains, leads to the sad situation that you mention. Arguably bigger charities are probably more transparent and account for money better than local Ngo's that have little accountability/ transparency. Britain is one of the few countries in the world with decent legislation that helps cut down misappropriation. Uncommitted funds like public donations are the holy grail for charities, they can spend them on what ever they like, many large donors have clear guidelines as to what they will fund and what they won't, this leaves organisations with large funding gaps in budgets, which means your money is unlikely to get spent directly on a project.
In big and small charities there is always exploitation of those who are in need to get money out of people. Look at all the charities who put pictures of cute kids with sad eyes on their websites.
Countries like Cambodia and much of Africa, have become "beggar nations" (quote from King Sihanook in 2002), people get so that they feel that they are better off getting aid than doing something themselves, people want to help the poor, but should try to focus on helping the poor to help themselves.
In developing countries local staff running causes might seem like good people and probably are, but they need to make aliving too. People might not always see the work they do in the same light that we do in the west. In Cambodia, Cambodians like to work for NGO's because pay and conditions are much better than working anywhere else, not because they particularly want to help others. The concept of volunteering doesn't exist, nobody will work for free. We even have to reward people to attend health and hygiene training in villages or they just won't come, even though their families will benefit.
One of my big hobby horses is that people make careers out of development, I have met ICRC staff with paid for houses back in UK and half a million pounds in their pension funds after 20 years service. Shocking really. Others argue if you want good people you need to pay good salaries. There are famillies here who have 2-3 kids at international school $12,000 a year per kid, all paid by the NGO, enough to keep half a dozen of schools funded for a year.
In Cambodia there has been approx 12 billion in aid money delivered since 1991, nearly all of it has left the country. Quality of life in most villages has not improved significantly, in contrast every 3rd car in Phnom Penh is a Lexus. I think, instead of aid programmes, if every man, woman and child in the country was given $1,000 cash instead, it would be a very different story. (probabbly would have had 1,000% inflation mind you)
Rant mode off
I think what ever you do, who ever you help, where ever it is, do it not out of guilt or that you get a good feeling afterwards, but that it really needs to be done and there is no other possible way to do it.