This may be the greatest period of wealth creation in our history. Who’s creating all this wealth? For the most part, entrepreneurs, and the numbers are amazing. The United States boasts 270 billionaires, 250,000 deca-millionaires, and five million millionaires.

Forbes magazine estimates that there will be 20 million millionaires in the next decade. “The Rich and the Poor: Demographics of the U.S. Wealth Distribution,” a 1997 study by John Weicher, found that “most of the nation’s rich are entrepreneurs in the American tradition.” It concluded: “Concern over the concentration of wealth should be tempered by the apparent fact that ‘the rich’ are a changing group, even over rather short periods, and by the fact that they are entrepreneurs.”

Michael Stolper, in his book, Wealth: An Owner’s Manual, reinforces this finding. He points out only three ways to become wealthy: win the lottery, save money over a long period of time or own your own business. More and more people today are finding that owning one’s own business is not only a way to fulfill one’s passion but also a way to wealth.

The New Wealthy

Much of this wealth is new and in the hands of rather young people. The six college friends who started Excite on the Internet in 1993 sold it in 1999 for $7 billion. Jeannette Symons, who co-founded Ascend Communications in 1989, sold it in 1999 for $20 billion. Ashu Roy and Gunjan Sinha sold their on-line directory, WhoWhere, in 1999 and collected $40 million each. Jerry Yang and David Filo, the co-founders of Yahoo, are each worth about $3 billion. Jeff Bezos of Amazon.com is worth over $5 billion. All of these entrepreneurs and others are reshaping the way wealth is created and even distributed.

The traditional analogy of the wealth-creation process refers to the image of an expanding pie. It emphasizes that wealth is not static; that what accrues to one person does not have to be taken from someone else. Wealth is dynamic and continues to grow—like an ever-larger pie.

A better analogy today is the creation and expansion of many pies simultaneously. Some pies are larger than others, but all contribute to the wealth of the nation as a whole. The bakers are the entrepreneurs who are innovating, pushing the edges of technology, pursuing opportunity.

Wealth Creating Wealth

The widespread increase in the numbers of wealthy entrepreneurs has dramatically accelerated the wealth-creation process. Last year, about $25 billion was invested in emerging companies by venture-capital firms, which have significantly increased in number over the past decade. At the same time, the amount of capital available for investment among business angels is estimated to be $50 billion.

These angels are not the Clarence, ring-a-bell, earn-your-wings kind of heavenly bodies, but the street-smart, been-there-done-that, got-rich kind of earthbound investors who seed start-up companies. Many are former entrepreneurs who have successfully cashed out of their businesses and are seeking promising investment opportunities. Others are professionals or corporate executives, now comfortably retired from their businesses, who have gained their wealth through their stock holdings and personal investments.

Whatever their backgrounds before donning their financial haloes, they all bring two critical factors to the entrepreneurial economy: financial wherewithal and a desire to get back in the game. These angels are helping to create more angels who, in turn, create more wealth. But, with this massive wealth creation process comes a countervailing tension.

Benefactor or Robber Baron

What will those who accumulate wealth do with it? Will they focus on conspicuous consumption and simply be conceived as the new Robber Barons? There is clearly a danger of that happening. It’s an interesting coincidence that the end of the 20th century is reflecting the same concern about wealth and its uses as the end of the 19th century did. Then, entrepreneurs, like Carnegie, Rockefeller, Vanderbilt and Ford had acquired unprecedented fortunes and were attacked for how they gained their wealth. Once they became involved in philanthropic efforts, they were criticized not only for their perceived stinginess but also their motives whenever they sought to give back to society. That same criticism is being leveled against today’s entrepreneurs.

With increasing wealth are coming increasing expectations for giving back. There are signs that entrepreneurs are fulfilling these expectations. Paul Schervish, a scholar on philanthropy, estimates that in the next 50 years from $41 trillion to $136 trillion of new wealth will be created, and that $6 trillion to $18 trillion of it will be transferred to charity. Wally Neilson, a noted consultant in philanthropy, estimates that entrepreneurs may establish as many as 25,000 foundations over the next 15 years.

As entrepreneurs direct the allocation of their own wealth, they are likely to change the scope and nature of philanthropy in the United States by approaching social issues as they approached business. Rather than focus their resources and energies on business venturing, they are likely to focus them on social venturing and bring to the philanthropic arena the same entrepreneurial skills and expectations that they demonstrated in their companies. Already, we are seeing this social venturing at work.

Golden Age of Philanthropy

Bob Beyster, who built Scientific Applications International Corporation, used his wealth to start his Foundation for Enterprise Development to encourage others to share equity. Ewing Kauffman, who made his wealth through Marion Laboratories, invested his resources in the Ewing Marion Kauffman Foundation to promote youth development and accelerate entrepreneurship in America. Jerry Yang and David Filo have become the youngest contributors to fund a chair in entrepreneurship at the Stanford Engineering School.

Dick Schulze, the head of Best Buy, established the Schools Family Foundation and has endowed the entrepreneurship center at St. Thomas University. Pierre Omidyar set up the eBay Foundation with 107,000 shares of pre-split eBay stock. Many others are using their wealth to shape a new and creative social entrepreneurship focused on performance, outcomes and experimentation. They are beginning to bring their own entrepreneurial know-how and experience to a variety of specific social problems, and insisting on becoming personally involved in the initiatives they choose to fund.

Many of today’s wealthy entrepreneurs are young and still running their companies. As they mature and as they take the time to give back to the society that enables their success, they have the opportunity to bring a new, entrepreneurial leadership to the social sector. The great wealth that entrepreneurs are generating at the close of the 20th century could lead to a golden age of philanthropy in the 21st.