Every year, around this time of the holiday season, Google co-founder Larry Page makes a huge gift to charity.

In 2015, Page’s foundation dug deep and directed $94 million in new Christmastime giving. The next year around the same time, it sent $129 million out the door. By 2017, the group was donating twice as much during the holidays as it was just two years before, giving $180 million from his fortune to philanthropy.

On the surface, gifts like these help enshrine Page as one of America’s most generous philanthropists, with a charitable track record befitting the world’s seventh-richest person.

There was just one problem, buried deep in tax records: None of this $400 million donated by his philanthropy, the Carl Victor Page Memorial Foundation, was actually going directly to charities. And these gifts, as for many donors, were not inspired by holiday cheer — but likely by an end-of-year deadline that incentivizes donors to effectively skirt the few rules that are meant to hold charitable foundations like Page’s accountable.

What Page was doing each year was something of a philanthropic sleight of hand. Private foundations are required by law to disburse at least 5 percent of their assets a year, a requirement meant to make sure that these taxpayer-subsidized philanthropies actually took part in charity.

But in recent years, Page’s foundation has made last-minute donations to hit the threshold only by making bulk donations to separate charitable accounts Page also had some control over, donor-advised funds (DAFs). Those donations technically count as contributions by the foundation, helping it meet the 5 percent standard, even though that money can then sit in the donor-advised funds indefinitely, with no requirement that it goes to needy nonprofits.

Billionaire philanthropy — envisioned as an elixir for some of capitalism’s problems — isn’t always what it seems.

The Carl Victor Page Memorial Foundation needs to make big donations to DAFs because it doesn’t give much to traditional charity. For instance, in 2017, the last year with available tax records, the foundation gave $1,000 to the American Cancer Society, nearly $100,000 to New Venture Fund, a group that backs left-of-center causes, and gave almost $800,000 to offer free flu shots to students in Oakland. Together, those three donations — the only ones not to a DAF in 2017 — would obviously not meet the 5 percent threshold for a foundation boasting a $3 billion endowment.

So that December, facing a deadline that could require the foundation to pay millions of dollars in hefty taxes, Page’s foundation gave $100 million to National Philanthropic Trust, along with another $80 million to Schwab Charitable, two giants that run DAFs for clients. Technically, Page no longer controlled the money — he merely “advised” it. But the hurdle had been cleared. 99.5 percent of the money donated that year by the Carl Victor Page Memorial Foundation would go to DAFs, not charities.

It is possible that Page, with a net worth of $65 billion, is simply motivated by privacy and wants to avoid disclosing individual gifts — and that he is indeed still giving hundreds of millions of dollars to charity each year, just silently through the DAFs. There is no way to know how much Page’s DAFs have disbursed since there’s no disclosure requirement; and even if they haven’t donated much, it isn’t as if Page could reclaim the money, so to speak.

Page has disclosed over $2 billion in donations to his foundation over the past 15 years, mostly in Google and Alphabet stock. But all told, 96 percent of the money that the Carl Victor Page Memorial Foundation has then “donated” has gone not to nonprofits, but to DAFs.

Tactics like these, hiding in plain sight, are increasingly hard to defend amid yawning income inequality. And these stories show how billionaire philanthropy — envisioned as an elixir for some of capitalism’s problems — isn’t always what it seems.

Representatives for Page’s family office and foundation did not respond to repeated requests for comment for this story.

The explosive rise of donor-advised funds in Silicon Valley

Page’s use of donor-advised funds seems to be an egregious example of a trend that is en vogue among Silicon Valley billionaires. These funds — which collect lump-sum payments into a charitable checking account that then, theoretically, slowly dispense the money over time — have become wildly popular with the wealthy and ultra-wealthy alike, tripling over the past decade as a new, controversial vehicle to house billions of dollars.

Foundations — the august institutions that probably come to mind when you think of philanthropy, from the Ford Foundation to the Gates Foundation — are the only ones with a 5 percent threshold (which many activists actually think is too low).

But Silicon Valley titans, including Elon Musk, have found a hack: Donations from the foundations to the DAF count toward the 5 percent, even if the DAF then sits on the millions indefinitely.

“It makes a mockery of the rules governing foundations,” said Al Cantor, a consultant to nonprofits. “I think in virtually every case it’s some kind of last-minute realization that they haven’t met their 5 percent and they dump it into a DAF, or it’s a conscious effort to avoid public scrutiny. And both of those really are not legitimate reasons. It may be legal, but it shouldn’t be.”

“It makes a mockery of the rules governing foundations.”

There is in fact nothing illegal about a foundation choosing to give to a DAF. And trade groups and lawyers representing philanthropists say there are good reasons to occasionally do so.

Advocates have told the IRS, which has explored new regulations to police these transfers, that these gifts make sense for a variety of reasons: Say, if a donor wants to dedicate money to a troubled nonprofit but doesn’t want to hand the money over to them until the situation improves; or if a donor wants to tap the expertise of a DAF provider’s staff; or if making a donation to a controversial group overseas could put the foundation at security risk; or to make a contribution to a cause that is outside the stated scope or region of the foundation’s work; or to easily pool money from multiple foundations for joint work.

“As charitable leaders, we will concede that if a private foundation (PF) is meeting all (or a substantial portion) of its payout requirement by making grants to a DAF, and then the DAF sits dormant or not making regular distributions, this is an abuse of the public trust and a loophole that should be closed,” wrote one trade group, the Community Foundation Public Awareness Initiative, to the IRS. But, it added: “We disagree with the implication by some DAF critics that if a private foundation meets a portion of its payout requirement with a grant to a DAF, this is prima facie suspect or nefarious.”

Even if it’s legal, activists say this tactic flouts the spirit of the 5 percent law, which was put into place in 1969 to prevent billionaires from warehousing wealth outside the tax system. That’s especially true for the more extreme examples like Page’s.

Many billionaires today have both foundations and DAFs — taking advice from consultants that it makes sense to have multiple vehicles to pursue their philanthropic dreams. Each has its own advantages: Foundations can be passed down to family members and can be completely controlled by a hand-picked board, while DAFs allow donors to keep itemized lists of their gifts off pesky tax forms and, of course, avoid any 5 percent distribution requirement.

Silicon Valley grows guilty about its tactics

One person close to many Silicon Valley billionaires said that there’s growing guilt among employees at family offices that use their foundations to dispense to DAFs and avoid real charitable giving. Privately, they say something must be done.

There are alternative models. The Barr Foundation, a major philanthropy based in Boston, for years used DAFs during the holiday season to help meet its 5 percent threshold during unexpected good years. But when Jim Canales took over in 2014, that was killed.

“I was not comfortable with the practice, principally out of a commitment to transparency,” Canales told Recode. “This practice didn’t feel consistent with that.”

Without a revenue stream from the Barr Foundation, the DAF essentially ran out of money and was officially closed a few years later. The foundation instead has developed a pipeline of nonprofits to which it can send money if there’s unexpected excess in the budget.

Some foundations have tried other strategies to make the math work at the end of a surprisingly good year. One person who worked at a major tech foundation recalled that foundation staff would sometimes direct them to drastically increase the size of certain planned contributions, explicitly to meet the 5 percent bar.

But these are margin-tinkering maneuvers that foundations do when they make a budget error. The DAF usage by the likes of Page falls into an entirely different category.

How Larry Page can skirt these rules to remains a philanthropic enigma

It doesn’t appear that charitable hijinks of this scale happen often. When the Economist randomly sampled 4,000 foundations, it found that only 11 of those gave over 90 percent of their distributions to major DAF providers. But those foundations that do give almost all of their money to DAFs can add up to some real coin. The Chronicle of Philanthropy ran a cursory search and found $737 million that the top DAF providers took in over three years from these types of private foundations. (Given its methodology, that’s a “conservative estimate.”)

It is possible that Page is the country’s greatest exploiter of this loophole.

The Carl Victor Page Memorial Foundation has given at least $570 million to three DAF hosts — National Philanthropic Trust, Schwab, and Vanguard Charitable — over the last decade, with over $400 million of that coming in the three most recent years on file alone.

Because individual DAF accounts are not required to disclose how much they donate to nonprofits or to where, it is anyone’s guess whether Page has disbursed that money once it hits the DAF account. Technically, the DAF could sit on the money in perpetuity, or at least until he dies.

Recode reviewed the foundation’s tax returns with a nonprofit lawyer, Ed Chaney, and a nonprofit accounting professor, Brian Mittendorf. Chaney deemed the Page foundation’s donation history “weird” and “pretty unusual.” Mittendorf considered it “wild” and “pretty extreme.”

“While people might express concerns about distributions from foundations to DAFs, it’s largely been viewed as a thing that could happen. It’s kind of little. But in this particular case, it’s not so little,” Mittendorf said. “It’s the most glaring example to me that I’ve seen.”

Both said they saw this more as an intentional strategy than an unexpected year-end realization and scramble.

Chaney said his best guess was that the foundation was merely trying to outsource its back-office work to the DAF provider and that, if the DAF gave away money, then Page is “not intentionally doing an end run around the minimum distribution rules,” although he conceded that “they are still doing an end run around the transparency rules.”

Page has long been an enigmatic figure in the world of Big Charity. Despite setting up early corporate philanthropy efforts like Google.org, Page — and to a lesser extent, his co-founder Sergey Brin — has been largely AWOL from personal charity at scale, according to close observers of tech philanthropy. That’s despite Page and Brin sitting on $130 billion combined of possible charitable assets, befuddling those who would think that the founders — now in the public eye for more than two decades — would have at least made some attempts to shape the conversation about their wealth and power.

Adding to the mystery: The Carl Victor Page Memorial Foundation, named after Page’s deceased father, has no website and no publicly listed staff. All they have to do is publish an annual tax return.

Larry Page: “You know, if I were to get hit by a bus today, I should leave all of it to Elon Musk.”

A rare, but telling, signal about Page’s feelings toward philanthropy came in 2015, when Page — who has not signed the Giving Pledge — confirmed that he believed giving his billions of dollars to Elon Musk would do more for the world than giving it to charity.

“You know, if I were to get hit by a bus today,” Page reportedly said of his personal wealth, “I should leave all of it to Elon Musk.”

(Musk, for what it’s worth, is another prolific Silicon Valley donor who has used his foundation to funnel money to a DAF, though at a smaller scale.)

Page’s $2 billion in donations to his foundation has funded everything from Ebola response to the Clinton Foundation. It’s unclear to experts why Page set up a foundation at all — as opposed to a DAF — at all if he planned to sit on so much of the money, although when he set up the foundation in the early 2000s, DAFs were not quite as popular as they are today.

Despite draining hundreds of millions of dollars from his foundation into a DAF each December, Page continues to fill up his foundation’s coffers with new money — injecting $450 million more into the foundation in 2016, for instance — suggesting that he may have some plan in sight. (We still don’t know how much Page is putting into his DAF, directly — only from the foundation.) And now that Page officially stepped down from any operational role at Google’s parent company, Alphabet, this month, hope remains in some quarters that Page, only 46, will finally grow serious about philanthropy.

It is not uncommon for tech billionaires to take their time — and to be intimidated by the challenge — to figure out how to dispense with their fortunes. Tax filings say that Page was spending an average of just 15 minutes a week on foundation work. Now, at the very least, Larry Page has more time to focus on it.

Whether he develops the will to do it — and with transparency — is another question.