The Esmee Fairbairn Foundation and the Northern Rock Foundation have each contributed £500,000 to Charity Bank's loan stock.
Each foundation has provided 10 years' worth of convertible loan stock.
It is believed to be the first transaction of its kind for a community development finance institution in the UK.
The new capital will add to the bank's lending capacity.
Charity Bank will pay interest of 4 per cent a year for the funds. Malcolm Hayday, chief executive of the bank, said: "If community development finance is to move from the margin to the mainstream in the UK, it has to be adequately capitalised.
"The ability to attract capital from socially motivated individuals and trusts is a major challenge for us all."
Fiona Ellis, director of the Northern Rock Foundation, said: "Charity Bank has offered us a welcome opportunity to invest some of our reserves in direct pursuit of our mission."