The former communities secretary Hazel Blears has been appointed chair of the Social Investment Business, which provides grants and loans to voluntary sector organisations.
Blears, who was the Labour MP for Salford (later Salford and Eccles) from 1997 to 2015 and was communities secretary from 2007 to 2009, replaces Sir Stephen Bubb, who has been SIB chair since 2006.
Since 2002, the SIB has disbursed more than £388m in grants and loans, making it one of the largest social investment portfolios in the UK. It managed the Futurebuilders Fund, which until its closure in 2010 provided finance for charities bidding for public services contracts.
Blears, who is a member of the advisory board of the social investment wholesaler Big Society Capital, will earn £25,000 a year in her new role, which she will take up on 1 April. A spokesman for SIB said she would work an average of three days a month.
"The Social Investment Business has a fantastic record of helping charities and social enterprises access the finance they need to deliver services in their communities," she said.
"Social investment has enormous potential to help us tackle some of our biggest social challenges, such as improving dementia care, and I am determined to make sure money can go where it is needed most."
Bubb said he was delighted that Blears would succeed him as chair at a crucial time for social investment.
He said: "The third sector faces huge financial problems at the moment and social investment is one way of funding vital work.
"However, we are also at a crossroads. Social investment needs to be simple, relevant and affordable. We have moved away from funds like Futurebuilders, while too much emphasis has been put on more complex and expensive models and structures. We must address this to avoid social investment becoming an irrelevance to many in the third sector."
Further appointments to the SIB board will be announced next month, an SIB spokesman said.