(FORTUNE Small Business) – Baltimore 21215 doesn't have the same cachet as Beverly Hills 90210. If you're cruising through this zip code, you probably took a wrong turn off I-83, and you're passing drug dealers and abandoned row houses. Residents here have the highest rate of welfare dependence in the city.

So imagine the reaction of Joanne Rojas, then principal of St. Ambrose Elementary, a Catholic school in the heart of 21215, when an alumnus called in 1998 with an intriguing question. "He asked whether we could use some scholarship money," Rojas recalls. "Then he tells me he plans to give us $50,000 a year. I nearly fell off my seat."

The alum was Tom Gildee, 56, who grew up in the shadow of St. Ambrose and attended the school as a child. Since 1998, Gildee's nonprofit, Kids-R-VIPs, has provided need-based scholarships to 100 inner-city African-American children in grades three through six, primarily at St. Ambrose and three other parochial schools in Baltimore. Now Gildee has larger plans. He's ramping up his philanthropy from its current $400,000 a year to $1 million by 2008, allowing him to fund some 200 kids annually. Gildee plans to support each child for ten years, giving him or her $5,000 a year from third grade through high school. (In first and second grades, he believes, the kids are too young to be evaluated by their grades, so it's hard for him to tell who deserves the funding.)

Gildee launched Kids-R-VIPs after founding a software company and selling it on his 50th birthday for $30 million. He wanted to give away about 85% of $15 million, and initially he explored writing checks to existing scholarship groups. But like many entrepreneurs, he couldn't find any that fit his style. "I never wanted to give money just to feel good," he says. Instead, he put together a very lean nonprofit from scratch. Kids-R-VIPs has no employees, Gildee funds most expenses out-of-pocket, and all decisions are made by a three-person board consisting of himself, his longtime attorney, and the head of a local foundation.

Gildee knows what some of the kids he now helps are going through. He was raised by his maternal grandmother, after his mother abandoned him when he was 5 (he never knew his father). His grandmother, on welfare herself, knew that he and his brother needed a solid education and firm discipline (neither of which were in abundance at the local public schools) to break the cycle of poverty. She persuaded St. Ambrose to give them full scholarships. "Some donor paid for my education," he says.

Today Gildee has 110 students in Kids-R-VIPs, and he sees every report card each quarter. The kids have to maintain a B average and dress appropriately for school, and they're required to volunteer for community projects, such as visiting senior citizens in a nursing home. So far Gildee has had to drop only one child for poor grades and another for attendance problems. "I want results," he says. "These kids blow away all the stereotypes that say inner-city children can't perform in school. They just need to be in a strong, disciplined place where adults care about them."

Gildee now plans to leave nearly his entire estate to Kids-R-VIPs. "I'm having a ball helping these kids," he says. "I already have all the material things I need."