Though leading philanthrocapitalists are giving away unprecedented amounts of money — Bill Gates and Warren Buffett are together handing out about $3.5 billion a year through the Bill & Melinda Gates Foundation — they are quick to recognize that even those sums are dwarfed by government and big business budgets. (The New York City schools budget is about $17 billion a year, by comparison.) To make a real difference, philanthropists have to find ways to use their money that have an outsize impact, typically by using donations to change how others spend their money.

Much of the strength of the philanthrocapitalism movement lies in the effort to remodel the philanthropic paradigm, and to offer a new vocabulary, a new mind-set, and new mechanisms for approaching traditional work. Reform of the philanthropic sector was, no doubt, long overdue. But the risk of advocating philanthrocapitalism without skepticism is that the movement could devolve into something like Tom Lehrer's old joke about the new math: that it could become more important to "understand what you're doing rather than to get the right answer."

The new philanthropists rightly insist on making their money go further, because in the past a lot of donors' cash has been wasted. One way of introducing more leverage is to adapt elements of the capital markets for use in this sector. Many innovative businesses have sprung up to provide some of the infrastructure of this new philanthrocapitalism.