There is a philanthropic convergence at the head of this year's billionaires' list. Warren Buffett, who tops the rankings, has pledged to turn over most of his fortune to the charitable foundation hitherto funded by the fortune of the man he replaces at the top, William H. Gates III.
This combination puts the pair at the forefront of a new wave of entrepreneurial philanthropists. They are eschewing traditional areas of giving such as the arts in favor of big global social issues, particularly poverty, health and education.
They have the wealth to do so. And, pace Buffett, who is outsourcing the disposal of his money to Gates, they are still young enough to have the energy and fire to undertake such ambitious and challenging philanthropy. They work on a global scale and apply the skills and approaches of business to the work of doing good.
This is reflected in our list of the largest U.S. charitable donations by billionaires last year. It is dominated by gifts of at least $100 million for specific health and education objectives.
Used to rigorous goal setting, benchmarking, accountability and operational efficiency, the new philanthropists seek to maximize the social impact of their actions, just as they sought to maximize shareholder value in their businesses. Comfortable with innovation, they believe they can develop new products and services through technology that will make it have a significant impact.
In practice, they are marrying the approaches taken by corporate social-responsibility programs now flourishing at companies like Cisco Systems (nasdaq: CSCO - news - people ) and PepsiCo (nyse: PEP - news - people ) to the single-issue focus and reach of nongovernmental organizations. In the process, they promise to change the rules of the aid and economic development game.
Gates has promised to step down from the day-to-day operations of Microsoft (nasdaq: MSFT - news - people ) this coming July to devote himself full time to the Bill & Melinda Gates Foundation. He has been selling 20 million Microsoft shares each quarter and donating the proceeds to his foundation. Currently, the foundation has assets of $37.8 billion.
Buffett irrevocably committed in 2006 to giving the majority of his shares in Berkshire Hathaway (nyse: BRK - news - people ) to charity, mostly Gates' foundation, in 5% chunks over the next 20 years. At the time of the announcement, the gift was valued at $31 billion, but if Berkshire's shares continue to rise in value, the donation's ultimate size could far exceed that sum.
In inflation-adjusted dollars, Buffett will give away more money than John D. Rockefeller or Andrew Carnegie. And apparently it takes resources on this scale to truly make a dent in any of the world's myriad problems. It's worth remembering that no philanthropist has solved a worldwide problem since Carnegie brought universal access for the poor to books via libraries, and Rockefeller used his billions to fund the research that would lead to the eradication of polio.
Gates' ambition is on a similar scale. He wants to eradicate the 20 leading diseases in the world during his (or his wife's) lifetime.
Carlos Slim Helú, the Mexican businessman who is now the world's second-richest person, has poked fun at Buffett and Gates for "going around like Santa Claus." In general, Latin American billionaires do not have a record of charitable giving comparable to Buffett or Gates, and the region's tax laws, unlike those in the U.S., often do not encourage it as much.
But Helú has given away hefty sums by any but Buffett and Gates' standards. He gave $100 million last year to the foundation run by former U.S. President William Clinton. In all, he has pledged close to $7 billion worth of cash and stock to fund education and health projects and to revitalize Mexico City's downtown historical district.
"Our concept is more to accomplish and solve things, rather than giving," he said when announcing in March 2007 a $450 million foundation for health care and research.
Gates and those of a similar mind would say that is exactly what they are doing. Most are as hands-on in their philanthropy as they were in their companies. They revel in the complexity of the challenges, and can imagine piecing together the necessary parts of, say, controlling malaria--from fundamental scientific research to creating low-cost delivery systems for the finished vaccine--as an exercise in supply-chain management.
The best of them also have the breadth of mind to join the dots between health and broader societal issues. How do you get a poor person to take a dose of medicine when he is too malnourished to swallow?
The Gates Foundation, for one, is already moving beyond the pure medical dimensions of health into agriculture and micro-financing. In January, it announced a $306 million package of agricultural development grants "designed to boost the yields and incomes of millions of small farmers in Africa and other parts of the developing world so they can lift themselves and their families out of hunger and poverty."
In the end, it and other foundations will inevitably find themselves in the business of promoting sound social infrastructure, open markets, the rule of law, and transparent and corruption-free government. This is the globalization and modernization of what Rockefeller called the "business of beneficence." And this will increasingly bring the new generation of foundations into conflict with governments around the globe.
It is already happening in India, where British-based Indian billionaire Anjil Agarwal is trying to use $1 billion of his $3.8 billion fortune to set up an elite private research university in India that Agarwal hopes will grow into an Indian rival to world-class institutions like Stanford, Harvard and Oxford. Though many Indians acknowledge the shortcomings of their country's higher education system, Agarwal is under attack from both the country's educational bureaucracy and local landowners, who would lose 10,000 acres of land. (Harvard, by contrast, makes do with 380 acres.)
While gaining some acceptance from governments, who, in U.K. Prime Minister Gordon Brown's words, "are starting to realize their limitations," entrepreneurial philanthropists are deeply distrusted by the traditional charitable establishment. Nor will all cultures be comfortable with philanthropic foundations that promote Western values of freedom, technology and entrepreneurship.
It will be interesting to see how the $100 million program investment bank Goldman Sachs (nyse: GS - news - people ) announced this week to school women in Africa, Asia and the Middle East in business and management will be received in those countries where women have traditionally not been given access to such education. Thomas Robertson, dean of the WhartonSchool of the University of Pennsylvania, one of the participating business schools, notes that there "will be issues when students go back into the family structure, or community, about how they'll apply what they learned."
Yet "no longer can businesses, governments or nongovernmental organizations afford to act independently of each other--the stakes are just too high," as John Connolly, global chairman of Deloitte & Touche, said at the World Economic Forum's January meeting in Davos, Switzerland.
It was there that Gates outlined the next evolution of entrepreneurial philanthropy, what he called "creative capitalism," a way to provide market incentives for companies to serve the poorest people in the world. But before the companies move in, the billionaires and their new foundations will beat the path.