Banks are to supply €25 million funding for community projects through a new national agency.
The Social Finance Foundation is a not-for-profit body which aims to divert some of the success of the Celtic Tiger economy into local development initiatives.
Businessman and former GAA president Peter Quinn will be chairman of the new Foundation. The Foundation will implement the Social Finance Initiative announced by Finance Minister Brian Cowen in Budget 2006.
Mr Cowen said today: "This initiative is part of the Government's commitment to ensuring that our economic success continues to be mirrored in social and community development". Many local projects have the potential to benefit their communities but they often experience difficulties in getting finance from banks.
Mr Cowen said the foundation's work will complement measures currently in place to promote and assist community infrastructure and local development.
Mr Quinn said: "I am convinced that the foundation will have a lasting, positive impact in local communities and a catalyst for deeper participation by private finance in the area of local and community development and social enterprise, providing a long-term sustainable funding stream for suitable social finance projects."
Irish Banking Federation president Richie Boucher said: "Our members are extremely supportive of this initiative, and are happy to contribute both the funding and the expertise of the banking sector to ensure that this excellent initiative achieves maximum impact in communities throughout Ireland."