This past weekend President Trump issued an Executive Order impacting seven federal agencies, including the Community Development Financial Institutions (CDFI) program and fund that is a part of the US Treasury Department.

A link to the Executive Order itself is provided below:

https://www.whitehouse.gov/presidential-actions/2025/03/continuing-the-reduction-of-the-federal-bureaucracy/

While the Executive Order has been portrayed in the media as an attempt to eliminate the CDFI program and fund, the reality is actually quite different.

First, the President cannot by Executive Order eliminate any agency, department, program or fund that has been created by Congress unless he is able to persuade Congress to eliminate it from the statute books.  So, the Executive Order does not eliminate the CDFI program or fund.

Secondly, the Executive Order specifically states that the seven federal agencies listed in the Order – which includes the CDFI program – are to themselves eliminate any of their functions that are not specifically stated in the statute and therefore required by law.

It appears that the President recognizes that he cannot unilaterally by Executive Order eliminate the CDFI program or fund.  This Executive Order seems to have the purpose of ordering the US Treasury Department to curb the CDFI program’s growth into less what the President’s administration obviously views as “extra statutory” purposes – in other words, things that are not required by law.

President Trump’s history with the CDFI Fund is somewhat mixed.

In his first term he proposed to Congress that the program be eliminated.  Congress rejected that request and actually increased CDFI funding to the point where in 2020, President Trump himself signed into law a $12 billion investment into CDFIs that was the largest single investment in history.

Where will this Executive Order lead?  Will it result in Congress eliminating the CDFI program?

Very unlikely.  The CDFI program has solid support on both sides of the political aisle.

As with virtually all governmental programs, it has a high overhead in department staff and has likely made some grants that were less beneficial to some underserved communities than others.  Some waste and abuse can be found in every government program, and it actually helps the credibility of those programs when the excesses of the programs can be scaled back and perhaps eliminated.

But the CDFI program has some great success stories and is likely to be retained by Congress as both Democrats and Republicans have seen their districts positively impacted by CDFI grants.

It may be scaled back some.  The amount of dollars allocated to the program could see some reduction.  The eligibility criteria to participate may become less quota-based than the Biden administration’s CDFI changes that increased the low-income percentages from 50% to 60% for CDFI institutions and required Advisory Councils that were very DEI oriented.

However, it is quite unlikely that the CDFI program is going away.

Several credit unions have reached out in inquiry as to whether the Executive Order makes a case for a major advocacy effort to try to “save the CDFI program.”

Things could change.  But at this time we would think that the primary advocacy efforts of credit unions should focus on protecting the tax exemption and trying to protect NCUA as an independent federal credit union regulatory agency.

Credit unions can only spend their political capital on a handful of issues at a time.  Those two – the tax exemption and preventing NCUA from being rolled into either the FDIC or Treasury Department – are certainly the priority at this time.

Should you wish to write a letter in support of the CDFI Fund, our recommendations would be as follows:

Send your letter not to the Trump administration stating your support or opposition to their Executive Order.  The order is issued.  No reason fighting that battle.

The battle will be, if there is one, in Congress.

If you are a CDFI designated credit union, the best approach – if you feel inclined to write your congressman or senator about the CDFI program – would be to express your desire to see the program continue, to encourage proper use of CDFI dollars in accordance with how Congress intended them to be utilized and to offer a real life example of how a grant from CDFI positively impacted your community through your participation in the program.

A little background.  The CDFI program was established in 1994.  It has been in place and funded annually – some years higher and some years lower – by Congress for the past thirty years regardless of whether the Republicans or the Democrats controlled Congress or the White House.

Both the Treasury Secretary and Deputy Treasury Secretary nominated by President Trump testified in their confirmation hearings that they supported the CDFI program and fund.

President Trump, as stated earlier, has previously in his first term sought its elimination even as he has signed into law major increases in funding for the CDFI program.

The program cannot be eliminated without an act of Congress.

It could be starved with smaller appropriations or decisions by the Treasury Department not to allocate the dollars appropriated by Congress.

It could see its criteria changed for being certified or receiving a grant.  Quotas and standards for participating could change.

But, unless something dramatic happens, the CDFI program will survive.

And, like all such federal programs, the pendulum will swing from higher budgets to lower budgets, from tougher participation standards to lesser standards and from more administration support to less.

That’s the American political system.  All departments and programs are subject to it.

The CDFI program and fund is no different.

We will continue to monitor any changes to the status quo on the CDFI program and what impact, if any, may come for CDFI-designated credit unions.

Until next time.

Dennis Dollar