David Cameron has said a new £600 million Big Society fund would be used to help tackle the country's "deepest social problems".
The Prime Minister claimed the money would help "smash away" the "patronising assumption" that small charities cannot do big things.
Speaking at the London Stock Exchange, Mr Cameron said the City had always been associated with helping business expand but now private finance would "help society expand".
Big Society Capital uses a mixture of money from dormant bank accounts and the main High Street lenders to fund investment in charities and social enterprises.
The initial capital for the fund will be an estimated £400 million in unclaimed cash from bank accounts dormant for more than 15 years and £200 million from Barclays, Lloyds, HSBC and RBS.
Mr Cameron said: "Often people look at politicians and manifestos and wonder, will it ever happen? Will something actually change? This Government is actually doing it. Within two years, Big Society Capital with £600 million of funds to invest in our society. I think this is important day.
"What happening here is really important. For years the City has been associated with providing capital to help business expand. Today this is about supplying capital to help society to expand."
The Prime Minister said the best ideas came from "the ground up" and that by empowering communities those ideas could be best harnessed. He said: "That's why we are so determined to take the three vital steps that will help us to build a bigger and stronger society."
Mr Cameron said this meant opening up public services to competition and choice, giving people more power and bringing social enterprises to the fore.
And he told his audience in the City: "There are sceptics to convince, vested interests to overcome, arguments that need to be won. Big Society Capital I think provides some of the specific answers to some of the specific questions I have been facing over the past two years."