People’s urge to give and be seen giving is almost as universal as their urge to acquire and be seen acquiring. The great philanthropists, possessing both impulses to a high degree, are a small and vital part in society’s attempt to do something about those in dire need.

Hospitals, schools, churches, museums and charities carry out most of the day-to-day work. Economists of several universities estimate the size of the philanthropic economy to be about 3% of our GDP, or $300 billion, just in America.

Following the example set by Bill Gates, the richest man in the world, Nebraska investor Warren Buff et, the world’s second-richest man, who allocated the biggest chunk of philanthropic capital in history. Who to? Well, according to his reasoning, the best person to take care of his $31 billion of hard-won fortune was the only man on the planet who proved to be better at making money than him, Mr. Gates. It is indeed remarkable that, in the ego driven world of high fi nance, Mr. Buffet accepted that his money will end in an outfi t bearing someone else’s name.

The Bill and Melinda Gates Foundation will become a company as large as Disney or Dell. Both successful executives have shown to plutocrats all over the world that philanthropy is as much about the doing as it is about the donating. The Bill and Melinda Gates Foundation has been, so far, the biggest private donor to the fight against AIDS, a fight the world risks losing.

An interesting phenomenon is brewing in the developed side of the world: the combination of increasing wealth and an aging population is leading to more gifts from the living and more bequests from the dead. “For the first time in history,” says Paul Schervish of Boston College, “more and more people have more money than they want to leave to their kids.” Tony Knerr, a fundraising consultant, adds, “There is an extraordinary amount of money available.

The lack is of good ideas on how to get the basket under the apple tree.”

Why do people give money and time? The idea of working very hard to earn money, only to later give it away, might strike anyone as odd. Economists, whose mistrust of selflessness is already the stuff of legend, have tended to hunt for hidden and obscure self-interest in what they call “apparent altruism.”

As usual in the economy, recent studies actually show the opposite: people gave more willingly if they could cloak their altruism in apparent self-interest.

When asked to give to a highly worthy cause — to help emotionally disturbed children — the donation rate tripled if donors were off ered a product in exchange for their gift. But when asked to give to a mildly worthy cause —helping the kid’s team to buy sports equipment — the offer of a present made no difference.

It should then come as no surprise that charities work hard to find ways to reward donors. Perhaps the most striking new development has been the rise in the number of philanthropic foundations.

In the past, foundations tended to be established in bequests. Now, foundations are often set up by the living. In America, according to Eugene Tempel, director of the Center on Philanthropy at Indiana University, there has been “an explosion” of new private foundations: their numbers are up from about 22,000 in the early 1980s to 65,000 today and growing. The trend is being closely followed in Europe. Most important is the fact that the new wealthy want to make sure their money is properly used, and so want to be involved in its expenditure. Bill Gates argues that: “You have to work just as hard at giving away your money as you do at making it.” This quantity and quality of money is what really matters. If foundations give wisely and help manage and coordinate efforts, they can influence the way charities spend the rest of their money.

That is especially valuable when a generation of prosperous baby-boomers is preparing to give away billions.

But not the same story can be told of charities. Not aiming to criticize those who do good, many charities still behave as if they were unaccountable.

Former senator and adviser to McKinsey’s non-profit practice, Bill Bradley, has found a stunning amount of charities that squander a lot of money. They spend big on raising funds and they hoard it only to later fail to oversee the efficiency of their spending. With the use of just a little better management techniques, perhaps provided by the increasingly huge numbers of former executives and entrepreneurs that are enjoying(?) their retirement, they could save tens of billions of dollars for much better use.

Philanthropists should use their influence to make that happen. The Gates Foundation and the Rotary Club set a good example. Mr. Gates’ demanding new job requires him to back schemes, assess them and dump failures. Mr. Gates plans to go part-time at Microsoft and devote more of his energy to his Foundation; maybe this is why the best charities and foundations are not always those with the lowest administrative costs.

Specialization is also key. Small grants scattered across deserving causes are likely to have less effect than concentrated eff orts. Expertise helps achieve the economies of scale that make as much diff erence in charitable work as in any other sphere of life.

Rotary’s worldwide effort against polio practically eliminated the disease. Mr. Gates’ focus on AIDS and other diseases increases the chances of making the necessary breakthroughs in medicine and delivery systems needed to beat those illnesses.

Foundations face two dangers: cronyism and vanity. Administrators come to like the perks and power of deciding who is deserving. Mr. Buffett has offered an answer to this when giving the bulk of his fortune to Mr. Gates rather than to the foundations of his children and his late wife, which will receive smaller amounts. Mr. Buffett told the rich that, instead of giving their wealth to “a bunch of old cronies,” they should shop around for the best foundations.

Vanity, probably the devil’s favorite sin, lies in the notion that foundations will live on after the philanthropist is gone, carrying their name down from generation to generation. The sad fact is that, after the founder has died, most foundations tend to become sclerotic and directionless.

So if you really aim to do good, to become a stellar philanthropist, spend your money fast: Do as much good as you can while you’re alive.

The side bonus: It feels good.