The philanthropist Eli Broad likes to spend much of his time with artists, whether at his table or by having their work on his walls. Although he made his $7 billion fortune in finance, the 80-year-old Mr. Broad prefers the company of creative types, such as artists Cindy Sherman and Jeff Koons. He even once caught the late Jean-Michel Basquiat smoking pot in his powder room. There's no way to share these intimate experiences, of course, but he likes to think that at least he's made it possible for the broad public to experience some of the same artwork.

Mr. Broad and his wife of nearly 60 years, Edythe, have given over $800 million to arts and culture institutions and initiatives in Los Angeles to help transform the city into what he now calls a 'cultural capital of the world.' At the same time, he's using his Broad Foundation's assets of $2.6 billion to try to keep America's public schools and medicalresearch institutions world-renowned, too. 'I work harder now than when I ran a Fortune 500 company,' he says.

At the end of this month, he'll announce the 12th winner of the $1 million Broad Prize for Urban Education, an award given to an urban school district that has demonstrated the greatest improvement in student performance, and has reduced the achievement gap among low-income and minority students.

Mr. Broad describes his approach to philanthropy as entrepreneurial. Mostly, he says, 'what I do is I bet on people.' Mr. Broad himself spends most of his time identifying effective leaders--and then he invests in them and their ideas. He also spends millions of dollars each year coming up with metrics to reveal hard data about performance, and only continues funding a school or institution if it is showing signs of improvement.

His respect for ambitious entrepreneurs could come from his own career, which started with odd jobs such as selling garbage disposals door-to-door and working as a drill press operator at Packard Motor. Born in the Bronx in New York, Mr. Broad moved with his family to Detroit as a child. He went to public school before graduating from Michigan State University. He has since given back to his alma mater by endowing a business school and a graduate school, and by making a $28 million gift to build the Eli and Edythe Broad Art Museum, which opened in fall 2012.

After college, Mr. Broad became a certified public accountant at the age of 20. At 24 he started Kaufman and Broad (now known as KB Home), a company that streamlined construction costs to offer suburban housing with low mortgages. A few years after it went public, he acquired a family-owned insurance business for $52 million that he turned into the retirement savings company SunAmerica. He sold it to American International Group in 1999 for $18 billion, and since 2000 has dedicated all of his time to philanthropy.

The grantee to whom Mr. Broad's foundation has given the most money is the Broad Institute, a genomic medicine facility he created with Harvard and the Massachusetts Institute of Technology. Now with over 2,000 employees, it started as the brainchild of the scientist Eric Lander, one of the leaders of the Human Genome Project. The Broads have given $600 million to the institute since 2003.

The Broads have made a big investment in revitalizing downtown L.A., particularly Grand Avenue. (They live in L.A.'s Brentwood neighborhood.) He and former Mayor Richard Riordan spearheaded an effort to build the Walt Disney Concert Hall in 2003. Mr. Broad gifted an additional $7 million to the Los Angeles Opera this year. 'We're getting more and more cultural tourists,' he says. Mr. Broad is hoping the arts will do for L.A. what artists did for the New York neighborhoods of Soho and Chelsea, making the neighborhoods more lively and desirable.

As the founding chairman and life trustee of L.A.'s Museum of Contemporary Art--and a major donor to the Los Angeles County Museum of Art, where his $60 million gift helped create the Broad Contemporary Art Museum in 2008--Mr. Broad has unmatched influence in shaping the city's focus on contemporary art. That power has unnerved some critics, but Mr. Broad doesn't appear to mind playing a lightning-rod figure.

He is now planning to build another museum called The Broad, designed by Diller Scofidio + Renfro and scheduled to open in late 2014. The new museum will house much of the Broads' two collections, both personal and belonging to their foundation. In all that includes about 2,000 works, some of which are currently being stored in half a dozen warehouses across southern California. (The Broad Art Foundation has lent out artworks to nearly 500 museums over the years.)

Mr. Broad first began collecting art in the 1970s. His and his wife's first purchase was a van Gogh drawing for $95,000. They went on to buy a 1939 Picasso, and then a 1923 Matisse drawing. Within a few years, the Broads turned to the contemporary market. They own over 100 Cindy Sherman photographs, as well as a substantialcollection of Roy Lichtenstein works from the 1960s to 1990s. Despite Mr. Broad's penchant for lending, he's so enamored with a few particular pieces that he prefers to keep them at home in his personal collection, such as a Jeff Koons metallicrabbitsculpture and a 1933 Mir