ROBERT SIEGEL, HOST:
When you hear the biggest charity in the U.S., you might think of The Salvation Army or the Red Cross, and you'd be wrong. It's actually a charity that you've probably never heard of - Fidelity Charitable Gift Fund. Noel King from our Planet Money podcast reports on a striking change in the landscape of charitable giving.
NOEL KING, BYLINE: Every year, The Chronicle of Philanthropy compiles a list of the biggest U.S. charities. Stacy Palmer is The Chronicle's editor. And when I asked her about Fidelity Charitable taking the top spot this year...
STACY PALMER: It's completely stunning.
KING: Stunning because usually a traditional charity, like the United Way, comes in at number one. The United Way dropped to second place this year, raising $3.7 billion. That's nearly a billion dollars less than Fidelity. Fidelity, of course, is the giant asset-management firm. Fidelity Charitable is a charity that it services. It doesn't give food to the poor or rebuild after a tornado. It runs donor-advised funds. Stacy Palmer explains what those are.
PALMER: Basically, what they let you do is set up what's like a charity checking account. You can put the money into this account, you get your tax deduction right away, and then whenever you want to, you can decide where you want that money to go.
KING: Let's go back to something Stacy said there.
PALMER: You get your tax deduction right away.
KING: This makes donor-advised funds great for donors. You get the tax deduction as soon as you put the money in your account, then you decide where the money goes when you're ready. But many funds don't have a deadline for when the money has to go to a charity. Legally, you could leave it in that charity checking account for 1,000 years, even though you already got the tax break. And that doesn't sit well with some charity watchers. Ray Madoff is a professor at Boston College Law School. It bothers her that donors can just leave the money but...
RAY MADOFF: They get the same tax benefits that they would get if they gave to a local food bank or the symphony and the money was actually put to use. They get that same benefit for putting their money in a Fidelity Charitable account.
KING: She thinks, if you get the tax break this year, the money should go to charities this year. Champions of these accounts see it differently. Howard Husock is with the Manhattan Institute. He writes about philanthropy. And he says, look, once the money is in the account, it will eventually go to charity.
HOWARD HUSOCK: Once one gives to a donor-advised fund, the only thing those funds can ever be used for is charitable giving. You can't get them back. So in effect, they constitute a huge rainy-day fund for charities across the United States.
KING: And meanwhile, that donated money is being managed and donors seem to like that. It's not just Fidelity Charitable that has seen enormous growth. Donor-advised funds from Vanguard and Schwab and Goldman Sachs are all creeping up the list of the biggest charities. Here's what makes some traditional charities nervous about this - Americans are giving more and more to donor-advised funds, but data shows we're not really giving more on the whole. So we're still giving about the same amount to charity, but by putting the money into donor-advised accounts, we are changing the time it takes to get to those in need. Noel King, NPR News. Transcript provided by NPR, Copyright NPR.