Premier Alison Redford says with the savings fund growing, it's time to put some of the money to work helping Albertans and diversifying the economy.
The Social Innovation Fund will be capitalized with $500 million this year and another $500 million the next.
It will explore ideas such as using the private sector to find new ways to eliminate poverty and family violence.
NDP Leader Brian Mason says he's skeptical of the plan, saying it could be another shell game to deflect attention on government cuts to social services.
The other fund will put up $200 million to advance research and innovation in agriculture.