The Tibetan spiritual leader received the Templeton Prize for exceptional contribution to affirming life’s spiritual dimension in London.
About £900,000 will go to Save the Children in India, with £125,000 set aside for The Minds and Life Institute.
Money will also go towards a fund to educate Tibetan monks about science.
The 76-year-old, who leads a Tibetan government in exile in India, has been awarded the prize for encouraging ‘serious scientific investigative reviews of the power of compassion’, and its potential to address world problems.
The John Templeton Foundation said he was chosen for exploring these issues – which are key themes of his teachings – with people beyond his own religious traditions.
Dr John Templeton, president of the foundation and son of the late prize founder, said: “With an increasing reliance on technological advances to solve the world’s problems, humanity also seeks the reassurance that only a spiritual quest can answer.
“The Dalai Lama offers a universal voice of compassion underpinned by a love and respect for spiritually relevant scientific research that centres on every single human being.”
The Dalai Lama, who was born Lhamo Dhondub, won the Nobel Peace Prize in 1989.
Other recipients of the Templeton Prize include fellow Nobel laureate Mother Teresa, the first recipient of the prize in 1973.