The White House on Friday proposed cutting $204.5 million in discretionary awards to community development financial institutions for fiscal 2027. That represents 63% of the program’s funding.
The budget request leaves $119.5 million in the CDFI Fund. However, according to the housing nonprofit Enterprise, $100 million of that would go toward a new program meant to stimulate economic development in rural communities. The remaining $19.5 million would support the rural financial assistance program, the New Markets Tax Credit and the closing out of unfunded CDFI programs, according to the request.
The White House, in the budget request, railed against previous iterations of the CDFI Fund, saying past administrations “abused [it] to advance a partisan agenda.”
“Past awards enabled lender practices in which race was a key determinant in access to loans, and provided funds for products and services that advanced immigration, gender and climate radicalism,” the document read.
The White House said it aimed to “refocus” CDFI Fund awards to “expand access to capital, finance infrastructure and bolster Main Street business development in rural America.” At the same time, the Trump administration said it would avoid funding wind power; bonds that allow noncitizens to be released from Immigration and Customs Enforcement custody; and what it called “gender extremism,” including LGBTQ+ clinics “that provide ‘gender-affirming hormone therapy.’”
The budget request is nonbinding. For example, last year, the White House requested cutting the CDFI Fund to $134 million. Congress, however, rejected the plan and kept the fund at $324 million, as it had for fiscal 2025.
At least two trade groups for financial institutions came out in support of a more robust CDFI Fund.
“Proposals to reduce funding for the CDFI Fund are concerning at a time when communities across the country are relying on access to safe, affordable financial services,” Scott Simpson, CEO of America’s Credit Unions, said Monday in a statement. “CDFIs play a critical role in expanding economic opportunity, particularly in underserved areas, and any reduction in support risks limiting that impact.”
Simpson did, however, note that the organization “share[s] the President’s focus on revitalizing rural communities.”
“We look forward to working with Congress to ensure these vital investments remain strong and continue to meet the needs of American families and small businesses,” he said.
Independent Community Bankers of America, meanwhile, said it “has persistently worked to ensure full funding for the CDFI Fund amid efforts to cut its resources, citing the important role of CDFIs in supporting economic development in rural and underserved communities.”
The Trump administration has consistently sought to pare the CDFI Fund. A March 2025 executive order targeted the fund to be reduced “to the minimum presence and function required by law.” Later that month, however, the Treasury Department reported to the Office of Management and Budget that all 11 CDFI Fund-connected programs are required by law.
Treasury Secretary Scott Bessent last May affirmed the administration has a place for the CDFI Fund.
“We believe that if CDFIs follow their statutory obligations and do not digress into more ideological boundaries, that they can be important institutions,” Bessent told lawmakers on the House Financial Services Committee.
Still, the OMB was slow to disburse funds in fiscal 2026. Through the first seven months of the Trump administration, the OMB had allotted just $35 million to the CDFI program, American Banker reported. And all of that money covered administrative costs rather than awards.
Beyond that, the Trump administration in October sought to lay off a number of CDFI employees in the Treasury Department.
"The [Reduction in Force] is necessary to implement the abolishment of the Community Development Financial Institutions (CDFI) which is based upon the Department of Treasury determination that its programs, projects, and activities do not align with the President's priorities," read the notices to employees, seen by American Banker.
