The Community Foundation for Northern Ireland will not receive a financial return on the investment, but instead will claim a 'social dividend'. This will include help from the bank to develop staff expertise in community assets.
The grant-making foundation hopes the investment, which is funded from its £16m endowment, will enable local charities to break away from their dependence on European funding.
"We were increasingly thinking of providing loans and financial backing rather than grants," said James Magowan, fund development manager at the foundation.
"Just by coincidence, Charity Bank had started to become active in Northern Ireland. Instead of trying to create our own loans, we thought that we should support the bank by providing some equity."
Magowan said the foundation saw the investment as pump-priming. "Charity Bank has only just started to be active in Northern Ireland, and this investment is to help it start up properly," he said.
"It will be interesting to see if this attracts further capital."
For Charity Bank, the investment is part of a continuing strategy to develop partnerships in key regions of the UK. It opened a new branch in Yorkshire in November (Third Sector Online, 9 November 2007).
The bank has also begun a major capital-raising programme in a bid to double in size by 2012.
Malcolm Hayday, chief executive of Charity Bank, said that the investment would serve to "strengthen the community foundation's role as more than a grant-maker" in Northern Ireland and in the UK in general.