While some foundations can best achieve their mission by spending more on grants and less on administration, not all foundations should make it a goal to spend a minimal amount on administration. For example, a foundation that offers technical assistance to its grantees as part of its mission may have to hire staff, ultimately, having higher administrative costs.
Examples of other activities that may be invaluable, but will cost something include: producing materials that detail the grant activities, mission and guidelines of the foundation; convening groups of grantees in the same field to encourage sharing ideas, brainstorming, and networking; attending board trainings; and incorporating site visits as part of the proposal review process; using social media to increase awareness of your foundation's interests and your grantees
It is likely that you will spend more if you engage in the above activities, but the increase in expenditures may be far outweighed by the increased impact of the grant or service provided. A foundation is completely justified in spending to further its charitable purpose, as long as the expenses are reasonable and necessary.
To benchmark your grantmaking foundation's administrative expenses against that of your foundation peers, use the Exponent Philanthropy Foundation Operations and Management Report.