This is what his site says:

Sources of Income

The total cost of operating all of Quackwatch's sites is approximately $7,000 per year. Quackwatch, Inc., has no salaried employees. It operates with minimal expense, funded mainly by small individual donations, commissions from sales on other sites to which we refer, and profits from the sale of publications. If its income falls below what is needed for the research, the rest comes out of Dr. Barrett's pocket. Except for the sales commissions, neither Quackwatch nor Dr. Barrett have any financial tie to any commercial or industrial organization.

http://www.quackwatch.com/00AboutQuackwatch/mission.html

Here is what wikipedia says:

The Quackwatch website is Barrett's main platform for describing and exposing for what he considers to be quackery and health fraud. The website is part of Quackwatch, Inc., a nonprofit corporation that aims to "combat health-related frauds, myths, fads, fallacies, and misconduct." Barrett's writing is supplemented with contributions from 150+ scientific, technical, and lay volunteers.

Barrett defines quackery as "anything involving overpromotion in the field of health," and reserves the word fraud "only for situations in which deliberate deception is involved."

Barrett has criticized numerous forms of alternative medicine and other practices he considers questionable, for example:

In 1985, Barrett was the author of an article in the Journal of the American Medical Association that exposed commercial laboratories performing multimineral hair analysis. He concluded that "commercial use of hair analysis in this manner is unscientific, economically wasteful, and probably illegal."

On his main website he also maintains public lists of sources, individuals, and groups which he considers questionable and non-recommendable. The list includes two-time Nobel Prize winner Linus Pauling (for his claims about mega-doses of Vitamin C), the National Institutes of Health (NIH) Center for Alternative and Complementary Medicine, as well as integrative medicine proponent Andrew Weil.

Barrett's involvement in the legal system has also spawned controversy about his objectivity to pass judgment on those he deems "quacks." He or NCAHF has initiated a number of lawsuits against those engaged in what he considers unscientific medical practices. He has also offered testimony on psychiatry, FDA regulatory issues, homeopathy, and other areas of alternative medicine.

The Science Panel on Interactive Communication and Health, appointed by the U.S. Department of Health and Human Services, named Barrett's Quackwatch as a credible source for exposing fraudulent online health information.

http://en.wikipedia.org/wiki/Stephen_Barrett#Online_activism

Here is what another Doctor says:

"Where does Quackwatch get funding, anyway? Quackwatch has been involved in a number of lawsuits and apparently Stephen Barrett had lost one or more lawsuits where the judge made him pay the opposing attorneys fees. Where does he get his funding?  He is a retired psychiatrist, how can he afford getting involved in so many lawsuits and pay all the legal bills?" ~Ray Sahelian, M.D.

Criticism

Barrett has become a "lightning rod" for controversy as a result of his criticisms of alternative medicine theories and practitioners. Barrett says he does not criticize conventional medicine because that would be "way outside [his] scope." He states he does not give equal time to some subjects, and has written on his web site that "Quackery and fraud don't involve legitimate controversy and are not balanced subjects. I don't believe it is helpful to publish "balanced" articles about unbalanced subjects.

A number of practitioners and supporters of alternative medicine criticize Barrett and Quackwatch for its criticism of alternative medicine. Donna Ladd, a journalist with Village Voice, says Barrett relies mostly on negative research to criticize alternative medicine, rejecting most positive case studies as unreliable. She further writes that Barrett insists that most alternative therapies simply should be disregarded without further research. "A lot of things don't need to be tested [because] they simply don't make any sense," he says, Ladd pointing specifically to "Chiropractic, acupuncture, homeopathy, vitamins and herbs, relaxation techniques, and preventive nutrition plans, as well as specific practitioners...".

Peter Barry Chowka, a former adviser to the National Institutes of Health's Office of Alternative Medicine, describes this as "putting down trying to be objective."

David Hufford, as a Professor at Pennsylvania State College of Medicine, wrote a peer reviewed paper in Journal of Law, Medicine & Ethics that specifically cited five of Barrett's Quackwatch articles, per Joel M Kaufman's Watching the Watchdogs at Quackwatch paper, as exemplary sources of systematic bias by the strongest critics in the anti-CAM literature. Kauffman had evaluated eight Quackwatch articles and concluded that were they "contaminated with incomplete data, obsolete data, technical errors, unsupported opinions, and/or innuendo..." Hufford also noted Barrett's co-authorship with a fourth grader in a controversial paper published in JAMA, a paper that Hufford, also a faculty member of the Master in Bioethics Program at the University of Pennsylvania, described as "...presents serious ethical problems in...actual deceit".

http://en.wikipedia.org/wiki/Stephen_Barrett#Defamation_lawsuits

Biography

Barrett is a 1957 graduate of the Columbia University College of Physicians and Surgeons and completed his psychiatry residency in 1961. In 1967 and 1968 he followed part of a correspondence course in American Law and Procedure at La Salle Extension University (Chicago). He was a licensed physician until retiring from active practice in 1993, and his medical license is currently listed as "Active-Retired" in good standing. Longtime resident of Allentown, Pennsylvania, Barrett now resides in Chapel Hill, North Carolina.

In addition to webmastering his websites, Barrett is a co-founder, vice-president and a board member of the National Council Against Health Fraud (NCAHF). He is an advisor to the American Council on Science and Health, and a Fellow of the Committee for Skeptical Inquiry (CSI). From 1987 through 1989, he taught health education at Pennsylvania State University.

Barrett is the consulting editor for the Consumer Health Library at Prometheus Books, has been a peer-review panelist for at least two medical journals, and has served on the editorial board of Medscape. According to his website, he "has written more than 2,000 articles and delivered more than 300 talks at colleges, universities, medical schools, and professional meetings. His media appearances include Dateline, the Today Show, Good Morning America, Primetime, Donahue, CNN, National Public Radio, and more than 200 other radio and television talk show interviews."

Barrett has received a number of awards and recognition for his consumer protection work against quackery. Quackwatch received the award of Best Physician- Authored Site by MD NetGuide, May 2003. In 1984, he received an FDA Commissioner's Special Citation Award for Public Service in fighting nutrition quackery. He received multiple votes or at least one first-place vote in "10 outstanding skeptics of the 20th century by Skeptical Inquirer magazine. In 1986, he was awarded honorary membership in the American Dietetic Association. Barrett has been profiled in Biography Magazine (1998) and in Time Magazine (2001).

The magazine Spiked-online included Barrett in a survey of 134 persons they termed "key thinkers in science, technology and medicine." When he was asked: "What inspired you to take up science?" he replied that his appreciation of medical science:

"probably began when I took a college course in medical statistics, and learned what makes the difference between scientific thought and poor reasoning. Medical school brought me in touch with the rapid and amazing strides being made in the understanding and treatment of disease. My anti-quackery activities have intensified my interest and concern in distinguishing science from pseudoscience, quackery and fraud."

http://en.wikipedia.org/wiki/Stephen_Barrett#Biography

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