Inflation began taking its toll on charities—as well as consumers—last year, as philanthropic giving increased, but not enough to keep up with inflation, according to the Giving USA 2022: The Annual Report on Philanthropy for the Year 2021.

Donors gave $484.85 billion during 2021, an increase of 4% over the $466.23 billion given in 2020, according to the report compiled annually by the Giving USA Foundation and the Indiana University Lilly Family School of Philanthropy. While giving increased in total dollars, it actually declined a small amount (-0.7%) after adjusting for inflation, the report said.

“The story of charitable giving in 2021 was closely tied to the events of 2020, a historic year that included a global pandemic, economic crisis and recovery, efforts to advance racial justice, and an unprecedented philanthropic response,” Laura MacDonald, chair of the Giving USA Foundation and principal and founder of the Benefactor Group, said in a statement. “In 2021, many donors returned to their favored causes, with many of the traditional sectors that struggled in 2020 making a recovery in 2021. However, [inflation] caused challenges for many nonprofits.”

Amir Pasic, the Eugene R. Tempel Dean of the Lilly Family School of Philanthropy, added in a statement, “The environment for giving is evolving in multiple ways. Robust economic growth translated to strong performance by institutional forms of philanthropy such as foundations and corporations. Yet these economic indicators may differ from what most people experience in daily life. The broader effects of the pandemic may have shifted individual jobs, incomes, lifestyles and family and financial priorities, potentially affecting their giving habits.”

The report focused on four sources of giving: individuals, foundations, bequests and corporations and tracks the gifts given to eight types of nonprofits.

Giving by individuals rose 4.9% in real dollars to $326.87 billion, accounting for 70% of ll donations. Giving by foundations grew 3.4%, to $90.88 billion. Giving by bequest $46.01 billion, a decline of 7.3%. Giving by corporations increased by 23.8%, totaling $21.08 billion. (18.3%, adjusted for inflation). Corporate giving includes cash and in-kind contributions made through corporate giving programs, as well as grants and gifts made by corporate foundations. A strong GDP and a good year for corporate pre-tax profits account for the strong growth in giving, the report said.

“Several of the subsectors that struggled in 2020, such as giving to health and giving to arts, experienced a recovery in 2021,” Josh Birkholz, vice-chair of Giving USA Foundation, said in a statement. “Conversely, several subsectors that experienced strong growth in 2020, such as education and human services, did not fare as well in 2021. On the bright side, two-year growth for each of these subsectors was over 5%, even when adjusting for inflation.”

Giving to religion; human services; foundations; public and society benefit organizations; health; arts, culture and humanities; and environment and animals each increased. Giving to international affairs organizations was flat and giving to education declined, the report said.

“Giving to public-society benefit organizations grew in 11 of the last 12 years and is one of the few sectors that grew in both 2020 and 2021,” Patrick M. Rooney, executive associate dean for academic programs at the Lilly Family School of Philanthropy, said in a statement. “Growth in this subsector aligned with increased support for legal rights and voting nonprofits, but it is most strongly driven by giving to national donor-advised funds. Some of America’s wealthiest individuals announced major gifts to national donor advised funds, and the growth in the stock market in the past two years helped to bolster this subsector.”

Giving to individuals was estimated to have grown 1.8%, to $11.74 billion, a slight decrease when adjusted for inflation. The bulk of the gifts were in-kind gifts of medications to patients in need, made through the patient assistance programs of pharmaceutical companies’ operating foundations, the report said.

Bolstered by strong market conditions, very large gifts by some of the wealthiest Americans reached a total of nearly $15 billion in 2021. These types of megagifts, defined in Giving USA 2022 as gifts of $450 million or more, represented about 5% of all individual giving in 2021, and played an important role in lifting individual giving.

Growth in the stock market last year was credited with some of the increased giving. The stock market and GDP recovered to pre-pandemic levels early in 2021 and continued to grow throughout the year. The S&P 500 grew 26.9% and the GDP grew 10.1%, creating strong conditions for some charitable giving in its battle against inflation.