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...For years, New York hedge fund tycoon Robert Mercer itemized in public tax filings the millions of dollars his family foundation gave to conservative causes. Then, in 2018, the foundationmade by far its largest giftto an account called a donor-advised fund that effectively keeps his philanthropy secret.

At the Allender Family Foundation Inc., based in a house near Las Vegas on Marie Antoinette Street, a millionaire family has used the same sort of fund for another purpose increasingly popular among the wealthy: keeping the tax benefits of philanthropy while delaying for years actually giving to those in need.

The Mercers and the Allenders are among a small but growing number of wealthy Americans who've discovered how to bypass rules designed more than a half-century ago to ensure philanthropists stay accountable for the billions of dollars in tax breaks they receive each year. The key is the donor-advised fund, or DAF, which is so flexible that charitable dollars can sit in one indefinitely, and so opaque that no one needs to know either way.

The surge of assets into the funds haslong sparked concern, but one gaping loophole has attracted far less attention. Private foundations are using them to sidestep federal laws designed to make sure the wealthy donate money to the needy in a timely fashion, not delay the gifts for generations.

The workaround involves the foundations that many rich people set up to manage their philanthropy. The organizations are generally required to pay out 5% of their assets annually and report each charitable gift to the public. Donor-advised funds, which are considered charities, satisfy that mandate, so they're an ideal way for foundations to postpone their giving. For example, Tesla Inc. co-founder Elon Musk, who built up $3 billion in a foundation, could report that he met the requirement for moving out money only because he transferred tens of millions of dollars to DAFs in recent years....