Martin McGuinness has defended the allocation of almost £2m of social investment funding to Charter NI.
He said schemes underpinned by Executive money were of immense value to local communities and helped get the unemployed back to work. The Deputy First Minister denied it was a slush fund for paramilitaries.
"If we were to be employing a rule of thumb that everybody who was involved in conflict in the past has no role to play in the future then I am afraid there would be no future for any of us."
Some funding from Stormont is reportedly going to organisations linked to the UDA.
Mr McGuinness said: "It is people at grassroots level deciding what is best to meet the needs of their own community.
"People have seized on the situation and on one person in east Belfast but I think that does a grave disservice to the good and decent people right throughout the country who are working daily to ensure that the lives of the people in the community that they come from are enriched by delivering valuable programmes.
"So let's get away from the nonsense that this is directed at paramilitaries. This is directed at communities and the communities are the people who are making the decisions."
He said steering groups overseeing spending of the money had a wide range of representation to ensure safeguards and auditing processes were in place.
He said they were giving work opportunities for the previously unemployed.
The SDLP, Ulster Unionists and TUV leader Jim Allister have raised concerns about how the money has been distributed.
At the weekend, the Sunday Life reported that loyalist paramilitary figures are demanding - and being given - massive amounts of public money from the Social Investment Fund (SIF).
First Minister Arlene Foster recently announced a £1.7m Charter NI project to help 300 people into work in east Belfast.
She was photographed with Charter CEO David Stitt, reportedly a UDA commander, at the launch of the project.
DUP leader Mrs Foster defended the funding on a recent BBC Spotlight. She said she wanted the police to take paramilitaries "out of society".
"But if there are those who are deciding to move away from violence, intimidation and paramilitarism, then we will work with them," she added.
"I am not turning a blind eye. What I am doing is trying to encourage people to move away from their past. I mean for goodness sake, we're in a mandatory coalition with Sinn Fein. Sinn Fein who are part of the republican movement, who were killing people of my community for many, many years. Are you seriously suggesting that I walk away from the loyalist community and not try to bring them along, and try to get them away from whatever past they've been involved in?"