The Big Society Bank will not make direct investments into social enterprises and charitable organisations but will back schemes which support them, the government has revealed.
A paper published on Monday by the Cabinet Office confirmed that the organisation will be independent of government, self-sufficient and have the power to raise its own capital.
The bank will have £300m to invest during its first year which will be made up of £100m from dormant bank accounts and another £200m pledged Barclays, Lloyds TSB, RBS and HSBC as part of the Project Merlin deal.
It will not however invest directly in organisations with a social mission but instead provide funding for funds, schemes and initiatives which do.
It was also announced that Sir Ronald Cohen, known as the "father of venture capital in Europe", and JP Morgan global head of research Nick O'Donohoe will act as special advisors to the government during the setting up of the Big Society Bank.
Although ministers plan for some of the bank's structures to be in place by April, they face some obstacles. Most notably, it still needs to be approved by the European Commission.
The Big Society Bank will massively expand finance for social ventures, creating a new source of finance alongside philanthropy and public service contracts," said Cabinet Office minister Francis Maude. "It's unthinkable for businesses to grow and thrive without capital finance but this has too often been the reality for charities and social enterprises.
"Our Big Society reforms mean charities and social enterprises will have the chance to deliver more public service contracts. Also, local people will want to use new powers to take over failing community assets like pubs and post offices. The Big Society Bank will be there to meet the increased demand for capital."
The Cabinet Office's report was released as David Cameron made his latest defence of his Big Society vision. Amid criticism of double standards due to the government's public sector spending cuts, the prime minister said the Big Society was his "absolute passion" and his "mission" in politics.
"I think it's a different way of governing, a different way of going about trying to change our country for the better, and it’s going to get every bit of my passion and attention over the five years of this government," he told an audience of social entrepreneurs.