The fund was originally proposed by Cr John Bezett for tourism-related activities, but suggestions it should have a wider role prompted a change of focus.
Tourism Dunedin, the tourism body largely funded by the Dunedin City Council, last week asked the council to increase its funding to the sector by almost 32%.
It suggested a $250,000 annual contestable fund be established to enable it and other groups to implement the Dunedin visitor strategy, due to be finalised this year.
Cr Bezett suggested a $150,000 contestable fund, as well as $10,000 for the chairman and $10,000 for the board of Tourism Dunedin.
Cr Chris Staynes said he supported the idea of a contestable fund but given the "unfortunate events in the last few weeks", the job losses at Fisher and Paykel and Tamahine Knitwear, it was important to find a way to attract business to the city.
The committee voted toset up the fund for economic development and to encourage job growth, and approved the $20,000 for the Tourism Dunedin board and its chairman.
