WASHINGTON—President Trump’s FY 2026 budget proposal calls for cutting $163 billion in spending, including all funding for the Community Development Financial Institutions (CDFI) fund.

The proposed elimination of the CDFI Fund does not come as a surprise, as President Trump issued an executive order on March 14 to axe the Fund and the staffing to oversee it, as the CU Daily reported here, here, and here.

It should be noted that the proposal is just that, a proposal, and Congress will now be going to work on the budget.

Credit unions have been working Capitol Hill since the mid-March announcement looking to protect the Fund, and were heartened when Treasury confirmed to the OMB that all 11 CDFI programs are statutory. 

At the time the White House order was announced Congress had already allocated $324 million in CDFI funding for 2025, which many CUs had been planning to apply for. In addition, $500 million in CDFI Bond Guarantee Authority for FY 2025 had also been approved.

Approximately 500 credit unions have a CDFI designation.

The appeals and the Treasury position, however, appear to have had no effect on the White House and its budget plan for the 2026 spending year. The federal government’s fiscal year begins Oct. 1.

Technically, the budget recommends the appropration of $100 million to create new Rural Financial Award Program, which would be administered by the CDFI Fund. The budget recomends a decrease of $291 million from the $324 million allocated in 2025, with the remaining $33 million basically going to close out prior awards, maintain certifcations, and support the New Markets Tax Credit Administration and Bond Guarantee program.

‘Woke Programs’

According to CU Strategic Planning, which has helped credit unions win more than $1 billion in CDFI grants, accompanying the budget is a document called “Cuts to Work Programs: that describes the CDFI Fund as being “abused to advance a parisan agenda.” CU Strategic Planning noted that statement is being made even though the CDFI Fund has had bipartisan support in Congress.

Americas Credit Unions Responds

“America’s Credit Unions has reviewed President Trump’s FY 2026 budget request, and we are not aligned with the suggestion to eliminate the Community Development Financial Institutions (CDFI) Fund’s discretionary awards,” said America’s Credit Unions President and CEO Jim Nussle. “We do share the president’s commitment to revitalizing rural communities—with credit unions currently operating roughly 900 branches that are the sole financial institutions in their census tracts, credit unions remain dedicated to serving all underserved communities, regardless of geography.

“America’s Credit Unions has consistently led the charge to protect and strengthen the Fund, and we will continue to work with Congress and the Administration to secure full CDFI funding,” Nussle added.

About the CDFI Fund & Credit Unions

America’s Credit Unions also noted:

• Over the past two years, the number of CDFI-certified credit unions has grown by 50%, reaching nearly 500 institutions that now serve over 19 million people through more than 2,800 branches nationwide.
• On a national scale, America’s 1,432 CDFIs operate in every state and territory, supporting a diverse range of small business owners and catalyzing private investment that creates or retains over one million jobs annually.
• “The CDFI Fund has demonstrated robust financial management by overseeing $304 billion in loans that have supported more than 4.3 million businesses, enabled nearly one million families to access safe, stable, and affordable housing, and facilitated the development of over 5,000 community centers, including those dedicated to childcare, healthcare, and education, all while maintaining a remarkably low default rate of 0.36% in 2023 that underscores its sound financial practices and effective risk management,” the trade group said.
• “During economic transitions, such as the 2020 downturn, the Fund’s role becomes even more critical as CDFIs acted as financial first responders, preserving jobs, keeping businesses afloat, and stabilizing communities in times of vulnerability, thus serving not only as a catalyst for economic growth during stable periods but also as a strategic reserve that enhances national resilience and contributes to America’s long-term security and prosperity,” America’s CUs stated.

DCUC Responds

The Defense Credit Union Council, meanwhile, said cutting the CDFI Fund would push military families “back toward predatory lenders and stall decades of progress in financial inclusion,” according to DCUC President/CEO Anthony Hernandez. “This program is not a handout—it’s a high-impact investment in national economic stability.”

In a letter to Treasury, Hernandez said that during FY2024 alone, CDFI institutions channeled more than $24 billion into underserved communities, financing more than 109,000 small businesses and supporting 45,000 affordable housing units. Many of these efforts were led by credit unions located near or on military installations—areas disproportionately affected by rural poverty and financial insecurity, DCUC stated.

DCUC also expressed its support for the sdministration’s proposed $100 million Rural Economic Development program—which would be housed under the CDFI Fund—and offered to help design and implement the new initiative.

DCUC has requested a direct meeting with Treasury leadership to discuss preserving key elements of the CDFI program and partnering on solutions to support military financial readiness.

“The cost of eliminating the Fund far outweighs any short-term budget savings, as it would squander decades of investment in economic revitalization and financial readiness for those who serve our country, Hernandez said. “We cannot afford to let budget decisions destabilize the financial future of those who serve our country.”

Spending Reductions, Increases

The budget proposal seeks to reduce spending in areas that include education and housing, while boosting spending for defense and border security, including a 65% increase for Homeland Security.