The obscure rule that is discouraging billionaires’ foundations from going big on coronavirus

Jeff Skoll said last week that he would spend another $100 million on coronavirus relief. | Matt Winkelmeyer/Getty Images for Sundance Film Festival

These philanthropies have $1.2 trillion that they could spend on fighting the coronavirus. So why aren’t they? For all the good that some billionaires like Bill Gates have done for the world during the coronavirus pandemic , the philanthropies of the rich are still sitting on $1.2 trillion in assets that could make a difference, right now.
Just because these millionaires and billionaires have poured money into their charitable foundations, it doesn’t necessarily mean that those foundations have then given that money away. These foundations generally give away just 5 percent a year. And they are likely to keep disbursing the same percentage of their money they typically do, despite the unprecedented public health and economic crisis.
“A fire is spreading and they have a giant tank of water. And we’re just going to spend 5 percent of the water?” said Vu Le, a popular writer on nonprofit issues. “Everyone is in denial.”
Few charitable foundations have signaled that they are departing from the usual protocol , which is why some like Le feel that the wealthy are not meeting this moment.
One of the few rules in the world of charity is that foundations must give away this 5 percent. But almost all foundations have taken it as a maxim that they’ll never do a penny more than that 5 percent, the legal minimum. Some do this out of inertia, while others stick to spending only 5 percent a year out of a desire to exist perpetually and to retain their war chests for when some future crisis hits.
For many of these foundations, however, the coronavirus is likely the greatest call to arms in a century. So what are they waiting for?
This question has long simmered as an inside-baseball matter in the world of philanthropy. And only about 20 percent of total US giving comes from foundations. But a series of recent announcements from two Silicon Valley philanthropies — and candid admissions from leaders like Gates — has uncorked an old debate, now set against higher stakes than ever.
Two Silicon Valley foundations make different decisions
Last week, Jeff Skoll, the first full-time employee at eBay, said he would quadruple the amount of money that his foundation would spend in 2020 by putting another $100 million into his foundation for Covid-19 . In addition to the new injection of cash, Skoll’s team said he would dig deeper into its existing endowment to come up with a total of $200 million in foundation giving this year. Skoll has said that his total coronavirus-related giving across different vehicles could reach as high as $500 million in 2020.
On the other side sits the Hewlett Foundation, which has taken some flak in the philanthropy community for announcing a few weeks ago that it does not plan to...