The 2008 recession hit the nonprofit industry hard. Donors grew austere to adjust to the changing economic climate. At the same time, the demand for social services — exactly those for which nonprofit organizations require funding — increased.

Nonprofits generally fill their coffers with individual donations and grants from foundations and governments. As a result, they can focus on achieving their mission more directly than corporations, who are primarily profit-motivated. Furthermore, the funding nonprofits receive is generally restricted — it can be spent only on specific programs and initiatives whose budgets are set well in advance of their launch. Funding for overhead, including employee salaries, is often scarce.

Still, some large nonprofits compensate their executive directors extremely well in an effort to coax top talent from high-paying industries. For example, Dr. Judith Salerno, the President and CEO of Susan G. Komen, a breast cancer foundation, took home a $475,000 salary between 2013 and 2014. Caryl Stern, the CEO of the U.S. Fund for UNICEF, grossed over $500,000 last year. Despite seeming wasteful on its face, this practice has merit. The top CEOs in the for-profit sector can deliver up to 1,350 percent shareholder returns over the duration of their terms. It stands to reason that an effective nonprofit executive director could have a huge impact on the organization’s work. But for staff lower on the totem pole, compensation is relatively meager. A CompassPoint study found that while the median nonprofit executive director earned $90,000, the median development director — the employee tasked with securing grants from foundations — earned $65,000.

The funding base of many foundations has increased substantially in recent years, but this increase has often not been accompanied by an increase in grantmaking. In a particularly illustrative case, between 1981 and 1990, the Robert Wood Johnson Foundation’s holdings tripled in value to $2.6 billion, but its grants grew by only 9 percent. If grantmakers continue these practices, nonprofits seeking to ameliorate the effects of the recession on low- and middle-class Americans will not have enough funding to keep the lights on — much less move the needle on their missions.

A Grantmakers for Effective Organization’s report found nonprofits generally spend about 20 percent of their grant funding on operating costs — those not directly associated with their mission. Eighty percent of organizations surveyed in that study reported grants typically did not even provide enough overhead funding to cover the costs associated with applying for those grants. As a result, the grant application process has become both frustrating and fruitless for a nonprofit industry that has become increasingly swamped with demand for social services. Many organizations now face a direct tradeoff between funding and social impact through a variety of channels.

First, insufficient grant funding can create perverse incentives for nonprofits to focus on profitable programs that are not directly relevant to their mission. For example, a museum that earns vastly more money from its gift shop than from admissions or donations might focus more on merchandising than on community education.

Second, fierce competition for limited funding can encourage nonprofits to race to outspend each other for lavish fundraising galas. Harvard Business Review reported one Blue Cross Blue Shield event included a $15,000 line item for silver punch bowls, and another took place in a $300,000 skybox at a baseball stadium.

Finally — and most pressingly — the job of nonprofit development directors has become highly stressful and difficult. One distressing study found half of development directors plan to switch jobs in the next two years. And once development directors leave their posts, they are difficult to replace. Small nonprofits that lack the budget to have dedicated human resources and recruitment staff have reported waiting one to two years before finding a development director. In general, these small organizations also have less cash ready to hold them over until they are able to once again commit a full-time staff member to the grant application process. This lack of financial security can force these organizations, often grassroots community-based groups, to spend more time thinking about paying for electricity than affecting social change.

If we are passionate about not only padding our nation’s economic indicators but also lifting people out of systems of poverty and oppression, we must demand better of foundations and other nonprofit donors. Nonprofits cannot deliver necessary social services to those in the throes of recession if they cannot pay their own employees.

Noah Kane is a Weinberg senior. He can be reached at [email protected]. If you would like to respond publicly to this column, send a Letter to the Editor to [email protected].