They came, they conquered and then they gave it all away. Eight-figure generosity used to be a rare thing indeed, but 21st century capitalism is breeding a new species of billionaire, and their cash could soon be coming to a community near you.

Leading the charge for a whole new generation of wealthy philanthropists, Sir Tom Hunter raised the charity bar last week with the announcement that he intends to redirect over £1bn of his personal fortune into deserving projects worldwide. Already marked as one of the UK's most benevolent donors, his latest pledge to pour funds into a vast array of initiatives from Scotland to Africa has propelled him into the benefactor big league, placing him on a par with such legendary donors as Carnegie, Rockefeller and Microsoft tycoon Bill Gates.

"With great wealth comes great responsibility. There is more great wealth in fewer hands than ever before in history, and you've got to take care of these things if wealth creation is still going to be seen as a positive force by the rest of the population," said Sir Tom, the day after a report by the Joseph Rowntree Foundation showed the gap between the rich and poor in Britain was at its starkest in 40 years.

"We've got all the material, goals have all been settled some time ago. So now the philanthropy is the real motivator to continue to make money."

When somebody gives away that kind of cash it's hard to do anything but applaud. To the average man on the street, billionaire capitalists are generally seen as the kind of people that shed excess wealth via a complex system of private jets and exotic holidays. But by declaring his charitable intent, the man who started out in business flogging trainers out of the back of a van in Govan is being credited with kick-starting a new brand of caring capitalism and practical philanthropy.

"Sir Tom's announcement was fantastic news. Not only was it a tremendously generous gesture but also an inspirational move that I'm certain will encourage others to follow his example," said Dr Salvatore LaSpada, chief executive of the UK Institute for Philanthropy. "He's helped to create a buzz about giving."

According to LaSpada, whose job centres on persuading the wealthy to open their wallets, the Hunter pledge is hard evidence of what he regards as the emergence of philanthropy's second age. In the 19th Century it was common for men of substance to invest in grand public projects, and it is almost impossible to walk through any British city without encountering many examples of what the Victorian rich did for us. It would be equally hard to find a single child in Scotland who has not been educated or entertained in a building founded by Andrew Carnegie.

The practice began to disappear in 1914, when the privations of the First World War put a curb on the wealth of moguls. The trickle of benefaction that remained then all but stopped with the creation of the welfare state in 1946, after which many believed that there was no longer a role for private philanthropy.

"Philanthropy looked dead and buried, but in the last five years we've seen a massive resurgence. Twenty years ago 75% of Britain's wealth was inherited, today that same proportion is in the hands of self-made men, and they want to put something back," said LaSpada. "These are people that want to leave a legacy. In 200 years, people will remember Sir Tom for his generosity and not his sportswear chain, in the same way that the name Rockefeller makes people think of medical research institutions and hospitals rather than Standard Oil."

A rapidly increasing proportion of the £11bn that is given to charity in the UK each year is from wealthy individual donors. Cynics might look on their donations as a blatant attempt to buy a bit of immortality, but on the day the annual Sunday Times Rich List is published, fundraisers reach for their phones, well aware that catching the ear of any one of the multi-millionaires listed within could mean the difference between success and failure for any one of a number of crucial projects.

"Frankly, we don't really care what their motivation is. So what if a millionaire wants his name publicised in return for a £250,000 donation? If it allows us to fund a whole range of new initiatives I can only see the arrangement as a win-win situation," said Amanda Ball, chief fundraiser at Help the Aged.

Ball points to the example of the The Disconnected Mind, a cutting-edge biomedical research project into dementia running under the supervision of Professor Ian Deary at the University of Edinburgh. Hailed as an historic initiative that has attracted the talents of some of the world's leading research scientists, it exists due to the £1.5m donations of a handful of wealthy investors and will be completed only if Help the Aged are successful in persuading a further £11.5m out of such sources.

"It is incredibly difficult to get government funding for biomedical research, particularly when it's centred on a non-sexy issue like ageing," said Ball. "There are thousands of crucial scientific efforts under way that simply wouldn't exist if it weren't for wealthy philanthropists, and even then for every project that's up and running there's another two deserving initiatives that will not happen." It seems that the recipients of donations like Sir Tom's have no problem if it helps their benefactors do a little legacy building while they're at it, and according to those organisations that have benefited from billionaire interest these donations are seldom handed down with an air of careless largess.

When Opportunity International approached the Gates Foundation for help with its plan to regenerate local African economies through a chain of subsidised banks, the eventual £8m it received arrived only after 18 months of careful examination and due diligence.

'Bill Gates kicked our tyres and looked under the bonnet. He may be a very wealthy man, but he looks on his donations as an investment and wants to make sure that they will see a genuine return in terms of making a difference to the issues being addressed," said Edward Fox, Opportunity International's chief executive.

"It's an exhaustive process that really tests every aspect of your organisation, but there's a genuine benefit to seeing how these men approach every task and I believe that it has helped make us a leaner, more efficient and effective charity."

Nobody is happy all the time, however, and some concerns have been raised over the accountability of the billionaire philanthropy movement. Its generosity seldom arrives without strings attached, and critics are uneasy over the power this can give a single individual, pointing to the central European university founded by George Soros - where the billionaire financier calls the shots over which subjects are taught - as an example.

"It's hard to knock philanthropy, but there is a small amount of concern over the amount of power this can put in the hands of a single man. It's their money so they call the shots, and that means only the projects of particular interest to that individual are likely to benefit, leaving others out in the funding cold," said David Sanderson, head of the Humanitarian and Development Practice at Oxford Brookes University. "That said, the reality is that when you're pushing through major-scale health programmes like those supported by Sir Tom Hunter, it's impossible to operate without the co-operation of the relevant local governments and international agencies."

While Hunter's donation may dominate the headlines, a growing number of wealthy business people are joining the Institute of Philanthropy's annual three-week workshop in which potential benefactors are flown around the world, meeting those of like mind and gaining experience of strategic projects.