WASHINGTON— The National Community Reinvestment Coalition is welcoming the Trump administration’s move to release long-delayed community development funds, while warning that new federal requirements could undermine their impact.
The response follows an announcement by the Office of Management and Budget that it will release approximately $289 million in fiscal 2025 funding for the Community Development Financial Institutions (CDFI) Fund, according to prior reporting by CU Strategic Planning and America’s Credit Unions.
The NCRC’s response is similar to that of credit unions, as the CU Daily reported here.
In a statement, NCRC President and CEO Jesse Van Tol said the funding is “long overdue,” emphasizing that CDFIs play a critical role in financing small businesses, affordable housing and community facilities in underserved areas.
CDFIs, which include many credit unions, provide capital and financial services in communities often overlooked by traditional lenders, supporting economic development and access to credit nationwide.
Rules Should ‘Not Make it Harder’
However, NCRC raised concerns over new restrictions tied to the funding that were announced alongside the release.
“We support strong accountability,” Van Tol said, but added that new policies “should strengthen community finance, not make it harder” for institutions to serve borrowers.
The Treasury Department has indicated it will implement additional compliance requirements and restrictions on CDFI awards, including measures tied to federal law and program oversight, according to America’s Credit Unions.
The NCRC warned that such changes could increase the risk of decertification for some lenders, potentially creating uncertainty, discouraging partnerships and slowing the flow of capital into underserved communities.
Treasury Urged to Work With CDFIs
The coalition also urged the U.S. Department of the Treasury to work directly with CDFIs—particularly smaller institutions—as it finalizes the new rules.
“Mission-driven lenders have firsthand knowledge of what these requirements will mean,” Van Tol said, citing potential impacts on underwriting, staffing and reporting, as well as how quickly funds reach communities.
The release of the funds follows months of delays that left many approved recipients, including credit unions, waiting to deploy capital in their communities, even as Congress had already appropriated the money.
Groups Express Caution
While industry groups broadly welcomed the funding release as a positive step, they cautioned that additional requirements could complicate implementation and delay the distribution of funds to the communities they are intended to serve.
The Treasury has until the end of fiscal 2026 to distribute the FY2025 appropriations, leaving ongoing questions about timing and how quickly the funds will ultimately reach borrowers and projects on the ground.
