The money will fund an initial five-year programme that will change the lives of thousands of children and young adults in the country.
Townsley opened his first travel shop in 1970 which eventually grew into Gold Medal, which he sold to Thomas Cook in 2009.
He founded the Kentown Wizard Foundation in his native Blackpool in 2015 to distribute his reported £100 million fortune to charity.
His latest pledge will support London-based Operation Smile, which provides free surgery for children in developing countries suffering a variety of facial deformities.
Its Malawi programme launched its first mission late last month and will embark on its second on August 31.
Over the next 12 months, it will provide surgery for nearly 1,000 youngsters with more than 60 medical volunteers staffing each mission.
The programme will also provide nutritional support and education and training initiatives to help medics in Malawi create sustainable cleft care in the country.
Cleft patients often struggle to eat and speak and can find themselves stigmatised.
The charity is aiming to conduct five missions a year, targeting 2,400 patients.
“I’m very happy Operation Smile are able to use my money in such an effective way,” said Townsley. “The eradication of cleft conditions in Malawi will have a profound effect on so many lives, both now and in the future.”
Margaret Ingram, chief executive of the Kentown Wizard Foundation, explained the foundation had been working with the charity for two years following an initial £200,000 grant in 2017.
“One of our trustees flew out to Malawi to observe Operation Smile’s work first hand,” she said.
“What he observed was a team of dedicated, committed health professionals working tirelessly to help as many children as possible.
“We believe this is an effective and well-managed charity where highly skilled professionals give their time for the benefit of others, so when the opportunity arose for us to provide multi-year funding to achieve a cleft free Malawi, we were delighted to say yes.”
Karen Jaques, chief executive of Operation Smile UK, added: “Thanks to the wonderful generosity of Ken Townsley and the Kentown Wizard Foundation, this generation of children in Malawi will be the first to live without the burden of an unrepaired cleft condition.”
Townsley was born in Blackpool in 1945 and started work age 15 at Blackpool airport as a traffic department apprentice handling luggage and shipping cargo.
He opened his first travel ship in Blackpool in 1970 with just two members of staff. Forty years later, his empire - Gold Medal Travel Group - was sold in 2009 to Thomas Cook for a reported £87 million.
He founded the foundation in October 2015 and has since pledged to use his fortune to support children and young people with life limiting conditions and serious illness.