The International Fund for Ireland has announced a shift in emphasis towards greater promotion of integration.
Pointing out that up to 90 per cent of schools and social housing are currently segregated in Northern Ireland, fund chairman Denis Rooney said its resources might now be more usefully applied to help people live together amicably.
He noted that more "peace walls" were built after the 1995 ceasefire than before.
The fund, which has been in existence since 1986, has spent more than €750 million creating 55,000 jobs in Northern Ireland and the Border counties.
Yesterday the fund launched a five-year plan entitled Sharing This Space.
The fund will spend €36 million on reconciliation, cross-community and cross- Border links this year and expects funding will be available for the following four years.
The fund receives money from the EU and the governments of the US, Canada, Australia and New Zealand.
Mr Rooney said the fund would offer its expertise and the trust it had from both of the main communities to bodies involved in such areas as education and housing.
It will phase out much of its previous involvement in economic development.
"Research has shown that getting Catholic and Protestant children to mingle is important in breaking down Northern Ireland's sectarian attitudes."
The Minister for Foreign Affairs, Dermot Ahern, praised the donor governments and the EU for their decision to continue supporting the fund.
Three Irish-American congressmen in Belfast on a fact-finding mission welcomed the new strategy. Republican congressmen Jim Walsh and Tim Murphy, and Brian Higgins of the Democratic Party, were in Belfast to celebrate 20 years of US support for the fund.
Mr Rooney said it was a tribute to the donor countries that 20 years after it was established, the fund was still in operation.
"We want to ensure that the fund will not jog gently to a passive sunset but will continue to take risks on behalf of the communities and deliver the full quarter century of effective intervention."
He said the fund was not saying that the unemployment problem in Northern Ireland and the Border counties was fixed. However, he believed the fund could be most effective now if it promoted attempts to enable people to live together more amicably and for young people to share their formative years more effectively.
"Over the remaining four years of the fund's life, the board wishes to signal an intention of assisting communities who wish to explore these themes with us."
The fund will still be involved in programmes focusing on community-based economic development.
The fund would work with schools that wished to become more welcoming to students from different traditions.
