Two key moments took place last year in the short history of the Bill and Melinda Gates Foundation that will have lasting effects on the way philanthropy works in this world. One was the June announcement that Omaha, Neb., investor Warren Buffett would give much of his fortune to the Gates Foundation's already substantial endowment (it stands at $31.9 billion today, including the first installment of the Buffett gift). The second came shortly afterward, when the foundation's chief executive, Patty Stonesifer, tapped out an e-mail to the foundation's grant recipients. "As we grow, truth-tellers will become ever more important to us. So please: Let us know when things are going well, and even more importantly, when they aren't."

With those words, Stonesifer articulated the central challenge the Gates Foundation will face internally over the next year and beyond. The Buffett gift stipulates that in addition to the foundation's giving away 5 percent of its endowment per year, which tax laws currently mandate, the foundation will by 2009 have to give away all of the amount that comes in from Buffett each year, essentially doubling the foundation's donations to more than $3 billion annually.

Already far and away the largest philanthropic organization in the world, the Gates Foundation is preparing for growth that is faster and larger than has ever happened before to any foundation or nonprofit organization. For a foundation that seeks to eliminate major world diseases, support development in poor countries and enhance the U.S. public education system, such growth is to be expected, and is even necessary.

But by calling for the truth to be told about the foundation's grants, Stonesifer is breaking with tradition as it had been practiced by the old industrial-money foundations set up by the Fords, Rockefellers, Carnegies and Mellons.

"I think there's no question she's identified the problem," says Joel Orosz, distinguished professor of the School of Public and Nonprofit Administration at Grand Valley State University in Grand Rapids, Mich. "The biggest problem always is getting the straight information about the grant. Everyone you talk to is interested in the success of the grant."

That includes the program officers who have a personal stake in seeing their programs succeed, the nonprofits that carry out the programs and depend on the grants for their livelihood, and even those tasked with evaluating the success of the grant. These lead to what Orosz calls a "conspiracy of silence," because no one wants to see failure. The grantees, no matter how much good to society their programs may accomplish, don't want to threaten the loss of their funding and are unlikely to bite the hand of the Gates Foundation.

"They need to set up an atmosphere where you can be the messenger going to the king and not get your head chopped off," he says. "When you've got a ton of money, it's hard to say no to people who are doing good things."

In sheer size, the Gates Foundation is the city on the hill that all other foundations and nonprofits will look to as a model of how to succeed ... or not. As chief executive, Stonesifer is in a unique position to carry out her mandate of openness. Of the four key decision makers within the Gates Foundation, Stonesifer is the only one who is not a Gates herself. (The fourth is foundation co-chair Bill Gates Sr., the father of Microsoft chairman Bill Gates III). But she has the trust and ear of the Gateses in managing their fortune, and her task is to run the business of parceling it out.