By Daniel Hunter

The government has launched its Big Society initiative that will finance charities and community groups.

The new financial institute has £600 million, most of which has been reclaimed from dormant bank accounts.

The new lender will back social enterprises that prove they can repay an investment through the income they generate.

"This is about supplying capital to help society expand," said Prime Minister David Cameron.

"Just as finance from the City has been essential to help businesses grow and take on the world, so finance from the City is going to be essential to helping tackle our deepest social problems."

Already the fund has agreed investments worth £3.6 million in five separate schemes, including:

- Think Forward Social Impact, which helps young people into work and education;
- Franchising Works, which trains the unemployed how to run a franchise business;
- the Community Generation Fund, which supports the development of renewable energy infrastructure, such as solar panels and biomass boilers, for local communities.