WASHINGTON — The Office of Management and Budget is moving forward with the release of $289 million in fiscal 2025 funding for the Community Development Financial Institutions Fund, a development welcomed by credit union advocates even as new federal requirements tied to the awards raise concerns about potential delays and added complexity.
According to CU Strategic Planning and America’s Credit Unions, details surrounding the timing of the disbursement and how quickly funds will reach Financial Assistance and Technical Assistance applicants remain unclear.
“CDFI funds are appropriated for a two-year period, which is fortunate since many other Congressionally approved funds expired last September at the end of the government’s fiscal year,” CU Strategic Planning said, noting the Treasury has until the end of September 2026 to distribute the FY2025 appropriated funds.
As the CU Daily has previously reported, credit unions approved for grants in 2025 have been waiting on the funds to deploy in their communities for numerous and various causes.
New Rules & Restrictions
The U.S. Department of the Treasury said the release will be accompanied by new rules and restrictions designed to ensure compliance with federal law, according to a brief statement. Those include provisions tied to the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 to prevent taxpayer-funded benefits from being used to subsidize non-lawful residents, as well as new requirements that certified CDFIs adopt and maintain policies ensuring compliance with federal anti-discrimination laws.
America’s Credit Unions said it is reviewing the new requirements and warned that additional conditions could slow the flow of funding and create uncertainty for applicants, including credit unions.
‘Release of Funds is Critical’
“The release of these funds is critical for the communities and families that rely on CDFIs every day. These awards, approved during the FY2025 funding round, can now move forward and begin delivering real impact. America’s Credit Unions, leagues, Inclusiv, credit unions, and other industry partners were relentless in our advocacy for their release, both with members of Congress and the Administration, and we appreciate the bipartisan leadership that helped make this happen,” said President and CEO Scott Simpson in a statement.“Earlier budget proposals moved to eliminate funding for the CDFI Fund altogether. Instead, Congress reaffirmed its support for community-based lending and preserved critical resources that help people access affordable financial services.
“At the same time, we are reviewing the new requirements tied to these awards. It is important that implementation supports, not complicates, the ability of these institutions to serve their communities,” Simpson continued. “Today’s funding is welcome, but the work is not done. We will continue working with policymakers to ensure the CDFI Fund remains strong, stable, and focused on expanding opportunity in the Main Street communities that need it most.”
The association also pointed to additional concerns, including proposed changes by the General Services Administration to System for Award Management certifications that could create new challenges for applicants seeking federal financial assistance.
Attempts to Zero Out Funds
As the CU Daily reported here, the funding release follows repeated efforts by the Trump administration to eliminate or significantly reduce support for the CDFI Fund. Early budget proposals sought to “zero out” the program, but Congress has consistently restored funding, including approving $324 million for fiscal 2026, matching funding levels from the prior three years.
The administration has also proposed cutting the fund by $204.5 million in its fiscal 2027 budget and has explored broader changes, including shifting the program’s focus toward rural communities and eliminating Treasury staff responsible for distributing the funds.
Amid those debates, more than 100 members of Congress signed a letter during the recent government shutdown urging the administration to continue carrying out the statutory obligations of the CDFI Fund to ensure private investment reaches communities nationwide.
More Than 400 CUs are CDFIs
Industry groups emphasize the program’s economic impact. As of Jan. 13, credit unions account for 446 of the nation’s 1,383 certified CDFIs, the largest share among depository institutions. According to America’s Credit Unions, each dollar awarded to a credit union generates roughly $12 in private investment, supporting projects such as housing development, small business growth and community revitalization.
CDFI-certified credit unions have provided $85 billion in community mortgage lending, $91 billion in consumer financing, $30 billion in business loans and $18 billion in small-dollar lending alternatives, according to America’s Credit Unions.
Cuts Again Proposed
Most recently, President Trump’s fiscal 2027 budget proposed cutting the Community Development Financial Institutions Fund by $204.5 million, placing the Treasury program in the administration’s “Program Cuts and Eliminations” section and recasting its mission toward rural communities.
