Christian Aid said the fund would be channelled through community level organisations and local governmentbe to support pilot adaptation and mitigation projects and .
The report, Community Answers to Climate Change, notes that some poor communities in developing countries are already successfully adapting to changes in the climate, while others are in need of support.
"Local communities need to become a central part of the international action agreed at Copenhagen and not an afterthought," said the report's lead author, Dr Alison Doig.
"They are not just the victims of climate change – they also have a significant role to play in the solutions."
The release of the report coincided with Tuesday's high-level UN climate summit, which saw several governments make climate change pledges.
China promised to cut carbon dioxide emissions by a "notable margin" by 2020, while Japan pledged financial support for low-lying and small-island states struggling to cope with some of the harsher effects of climate change. US President Barack Obama said states would need to work together but stopped short of making any new commitments.
Climate change will be on the agenda again when the G20 meets this week in Pittsburgh and again next week at the latest round of formal UN climate negotiations in Bangkok.
Christian Aid wants to see negotiators agree on a plan similar to the one proposed in its report to ensure that the global response to climate change takes the poorest and most vulnerable communities into consideration.
"This report includes a host of inspiring examples of how poor communities are already adapting to climate change and developing in ways which are environmentally sustainable," said Dr Doig. "Many more people could benefit from the sort of solutions they have discovered, if the financial and political support were available."
The report adds that the Sustainable Development Innovation Facility could improvie civic participation in local and national decision-making on climate change.
It states: "There has to be a clear path away from an approach which has been seen too often in recent years – that of producing a 'climate change plan' written by expensive international consultants appointed by a donor and then shelved and never delivered."
The report also stresses the need for transparency so that people in developing countries could clearly see how much money had been given to whom and for what purpose.
It urges: "It is necessary that climate change funds are seen as belonging to citizens and not just countries."