WASHINGTON--In its FY2027 budget proposal, the Trump Administration proposes cutting $204.5 million from discretionary awards for the Community Development Financial Institutions (CDFI) Fund, according to documents sent Friday to Senate Appropriations Committee Chair Susan Collins (R-ME).
“At a time when Americans are hoping their government will deliver on affordability and economic opportunity a proposal to cut funding for the CDFI Fund is deeply concerning. More than 70% of CDFI credit unions serve rural communities, and they are effective stewards of federal funding, leveraging CDFI grants at least 8:1 with private capital. Investing in CDFIs is investing in economic opportunity for all Americans,” said Cathie Mahon, president/CEO, Inclusiv.
Like last year’s proposal, this request would effectively eliminate the CDFI Fund’s award programs including Financial Assistance and Technical Assistance programming, proposing only minimal administrative funds for oversight and closeout of prior awards, CDFI certification, and administration of the New Markets Tax Credit Program. In addition, the proposal reduces the CDFI Fund’s administrative funding from $35 million in FY 26 to $19.5 million in FY 27.
"This reduction is particularly concerning given that the Fund is already facing capacity constraints as it manages the increased workload associated with the recertification process," Inclusive explained.
Last year, Congress did not adopt the President’s budget proposal and instead maintained full funding for the CDFI Fund at $324 million.
"And there has been strong support from Congress for the CDFI Fund this year as well. Inclusiv continues to advocate alongside our members, credit union system partners, and CDFI sector allies to ensure CDFIs can continue to effectively serve economically distressed communities across the country," the organization stated.
"Despite Congress providing level funding for the CDFI Fund in FY 26, the White House Office of Management and Budget continues to withhold FY 25 and FY 26 CDFI award program funds. This delayed deployment of vital economic development funding is reducing homeownership opportunities and small business job creation in low-income communities across America," Inclusive added.
ACU Responds
The President’s budget outlines key priorities for federal investment and will help shape the appropriations process in Congress in the months ahead. Appropriations committees in both chambers will construct bills that eventually go through Congress and to the president’s desk.
“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. CDFIs play a critical role in expanding economic opportunity, particularly in underserved areas, and any reduction in support risks limiting that impact,” said Scott Simpson, president and CEO of America’s Credit Unions. “We share the President’s focus on revitalizing rural communities. With nearly 900 credit union branches serving as the sole financial institutions in those census tracts, credit unions are often the only access point for financial services and remain committed to reaching underserved communities wherever they are. 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.”
America’s Credit Unions said it has been consistent in its support for full funding for the CDFI Fund, noting in previous advocacy efforts that credit unions generate $12 in private capital for each federal dollar awarded through the program. Last year’s Presidential Budget aimed to effectively “zero out” the fund, but after a diligent education campaign with lawmakers, the CDFI Fund was ultimately funded by both the House and Senate for FY2026.
"America’s Credit Unions’ Advocacy team is working with the Administration and Congress, so they understand the positive impact of the CDFI Fund and its net return in rural, suburban and urban communities nationwide," the trade group said.
DCUC's Perspective
The Defense Credit Union Council said it strongly opposes any proposal to eliminate or significantly reduce funding for the CDFI Fund.
"At a time when our nation’s servicemembers, veterans, and underserved communities face rising financial pressures, this proposal moves us in exactly the wrong direction," said Defense Credit Union Council Chief Advocacy Officer Jason Stverak. "CDFI-certified credit unions are on the front lines of delivering affordable financial services, small business capital, and housing support to communities that too often are left behind. The CDFI Fund is not just another federal program—it is a proven, market-based investment that leverages public-private partnerships to expand economic opportunity where it is needed most.
"We have already seen the consequences of proposed cuts. The Administration’s budget previously sought to dramatically reduce—or even eliminate—CDFI funding, a move Congress ultimately rejected on a bipartisan basis by maintaining full funding at approximately $324 million for FY2026. That bipartisan outcome reflects a clear reality: policymakers on both sides of the aisle understand the critical role CDFIs play in strengthening local economies and supporting working families," continued Stverak.
"For defense credit unions, this issue is especially personal, emphasized Stverak.
"Many of our member institutions rely on CDFI resources to serve junior enlisted personnel, veterans transitioning to civilian life, and military families who often face unique financial challenges. Eliminating this funding would directly undercut financial readiness efforts that are essential to mission readiness and national security," he said. "Let’s be clear: cutting the CDFI Fund is not fiscal discipline—it is a direct hit to the very communities policymakers claim they want to support. It would reduce access to safe, affordable credit and push more Americans toward higher-cost, predatory alternatives."
He said DCUC is urging Congress to once again reject "these shortsighted proposals and continue its strong bipartisan support for the CDFI Fund. We stand ready to work with lawmakers to ensure these critical resources remain available to the communities—and the servicemembers—who depend on them.”