Macmillan and Big Society Capital have partnered to launch a £12m Care and Wellbeing Fund to lend money to develop and scale community care services.

The ten-year fund, for which Macmillan and BSC have both contributed £6m, is said to be used to “develop and scale new and existing community care services for people affected by cancer and other long-term conditions”.

It will provide loans and other investment for charities looking to develop or scale up means of solving community problems for people with long-term illness, and it will work closely with public sector commissioners, who are likely to be significant customers for the services developed.

Its first investment will tackle loneliness and social isolation in Worcestershire.

The fund, which is available to charities and asset-locked social enterprises, will be administered by Social Finance, which designs and runs social investment programmes. Support will be provided by the Health Foundation, a charity which supports the development of better healthcare.

Social Finance said the majority of the fund will be "invested in service redesign projects in partnerships with health commissioners".

It will offer investment of £500,000 to £2.4m.

"This is all about creating social impact and investing in organisations and service redesign projects that have social impact at the heart of their governance," Social Finance said. "All investments must meet the Fund’s and Big Society Capital’s criteria of social impact."

Nick O’Donohoe, outgoing chief executive of Big Society Capital, said: “The Care and Wellbeing Fund marks an important step forward for social investment, bringing together the expertise of leading charities to unlock significant resources to help tackle the growing challenges we face in supporting an ageing population. We hope that this fund will help to catalyse innovation and enable more great projects to reach more people.”

The Care and Wellbeing Fund will encourage commissioners and voluntary organisations to “focus on delivering better outcomes in health and social care, and will provide the financial support and advice needed to make these a reality”.

Investment decisions are to be approved by an independent investment committee with NHS, local authority and financial expertise.

Allan Cowie, director of service excellence and support at Macmillan, said: “We believe investing in the Care and Wellbeing Fund can help create the kind of quality and personalised services that people affected by cancer so desperately need.

“Through our investment and expertise we will help drive innovation, seek to grow community based provision and as a consequence enable new sustainable services to be delivered that people can access when and where they need them.”

Clodagh Warde, from Social Finance, is the director of the new fund. She said: “Social Finance is delighted to be managing the Care and Wellbeing Fund. We will draw on the significant investment, analytical and healthcare expertise of the Social Finance team. We believe that socially-focused capital can unlock innovation and deliver real impact in the health and social care sector.”

The fund has been created to address an estimated £30bn funding gap for health and care services which is expected to emerge by the end of the decade.

The Care and Wellbeing Fund Investment committee comprises public and private sector experts with a wide range of experience in social investment, healthcare and government.

These are David Hunter, trustee of Age UK; Sophia Christie, health service expert with the Department for Health; Christopher Egerton-Warburton, partner at Lion’s Head Global Partners; Sheila Wheeler, former local authority chief executive; and, Lisa Barclay, director at Social Finance and former investment manager at Bridges Ventures.

The fund’s first investment is of £350,000 into a new programme tackling loneliness in Worcestershire. The intervention will be offered to 3,000 people and will be delivered by Age UK Herefordshire and Worcestershire, together with local voluntary and community organisations.

More information about the Care and Wellbeing Fund will be available on its website - www.careandwellbeingfund.co.uk - when that goes live.