Charities are too often "conservative, comfortable and even self-satisfied" and put the survival of their organisations ahead of their beneficiaries, according to Kevin Carey, chair of the RNIB.
"If we believe our own rhetoric, we are cutting-edge, fleet-of-foot risk-takers – but I don't believe our own rhetoric," Carey told the Charity Finance Directors' Group annual conference this morning.
He said the sector too often provided "a few people with gold-plated, bespoke services" and needed to extend its reach to a wider community.
"If there are gold-plated goods at the front of the store, there are empty shelves at the back," he said. "In my own field, of blindness and visual impairment, the whole charity sector is serving less than half of the market."
Carey said a decision to provide services to more users would also make it easier for charities to attract funding.
"We have to diagnose problems and market solutions, judging our impact on the basis of sales and refusing to get sentimental," he said. "We have to sell what investors want to fund and people want to buy."
He also said the charity world was "too cosy" and that if it was to survive, more charities would have to adopt social enterprise models, seek out mergers and prove their effectiveness.
In many cases, he said, he would like organisations to stop calling themselves charities because it carried connotations of amateurism and describe themselves as social enterprises instead.
"We are not taken seriously," he said. "We are called daft names like 'not-for-profits', which tells you what we're not, 'third sector', which relegates us below the other two, 'NGOs', which says we're not government, and 'civil society', whatever that means."
Carey said the sector was also hampered by "a regulatory framework based on Oliver Twist's workhouse, with all its condescension, amateurism and short-termism" and was "cripplingly under-capitalised" because charity trustees disliked borrowing and had little access to funds.