It took getting into the family business — giving away money — for Howard Warren Buffett and Alex Buffett Rozek to feel close, more like brothers than the second cousins that they are. Alex, who is 34, was first exposed to philanthropy through his grandmother (and big sister to Warren) Doris Buffett. Doris was in the habit of donating $10,000 to college classes on giving, then watching as the students determined how best to distribute the money to the community — teaching by doing. Alex helped his grandmother with her gifts, but when great-uncle Warren announced he was giving away his fortune in 2006, the explosion of interest in the family’s philanthropic concerns turned Alex’s assistance into more than he could handle on his own. He called his second cousin.
Howard had just finished working for Obama’s campaign, and he thought they could apply a similar social media strategy to organize interest in Doris’s program. They formed the Learning by Giving Foundation in 2011. Alex became its president and asked Howard to join the board. They’ve since launched a MOOC — massive open online course — to expand the foundation’s reach and fund the best ideas developed during the class.
Howard, 29, is co-author of 40 Chances, a book by his dad, Howard G. Buffett. The book — and the cousins’ work together — applies some of the same principles of investing that Warren has become so famous for to philanthropy. They try calculating the amount of social good that will come out of a program or project, just as Warren would a return on his investments at Berkshire Hathaway (BRKA).
The cousins’ various foundations and projects are intertwined: Howard teaches a course at Columbia University called Public Management Innovation, which incorporates elements of 40 Chances, social value investing, and Learning by Giving into the curriculum.
Howard and Alex don’t view themselves as philanthropists — it’s not their money they’re giving away. Instead, they’re putting systems in place to help make philanthropy more efficient and effective. As Howard puts it, “Why do anything other than work to make the world a better place, especially with the amazing benefits we’ve been given?”
Howard W. Buffett: “I often say that doing good does not excuse us from doing better.”
Alex Rozek: “My grandmother says the money was made by investing, so it should be distributed by investing — investing in people.”
This story is from the October 07, 2013 issue of Fortune.