WASHINGTON–President Trump has issued a new Executive Order that includes among its targets the elimination of the  Community Development Financial Institutions (CDFI) Fund, which has been tapped by countless credit unions during its life to support hundreds of millions of dollars in loans. 

Both credit union organizations and individuals have reacted to the announcement, with one organization predicting it will have “severe consequences” for credit unions and one CEO saying the loans the Fund makes possible are “tools for financial empowerment, not handouts.”

“Credit unions exist in the financial services marketplace to provide provident credit to millions of Americans, and they do it in a way that creates financial well-being so people are empowered to stand on their own two feet,” said America’s Credit Unions’ CEO Jim Nussle in a statement. “The CDFI Fund has allowed hundreds of credit unions to bolster economic opportunity in their communities and allow their members to achieve the American Dream—further enhancing our nation’s strength. America’s Credit Unions will continue to engage the Trump Administration, Treasury Department, and other stakeholders on programs that support these shared goals.”

Approximately 495  credit unions are certified CDFIs and NCUA has actively encouraged CU leaders in the past to become certified and take advantage of the funding.

“The Defense Credit Union Council (DCUC) is concerned by the decision to eliminate funding for the U.S. Treasury’s Community Development Financial Institutions (CDFI) Fund,” DCUC said in a statement. “As the national voice for credit unions serving our military and defense communities, DCUC knows firsthand that the CDFI Fund is a critical lifeline enabling credit unions to serve underserved populations – including low-income neighborhoods and military families – with affordable financial services.”

DCUC said it has shared its position as it relates to the CDFI Fund in letters to both the U.S. House and Senate.

About the Order

The new executive order, titled, Continuing the Reduction of the Federal Bureaucracy, reflects the president’s commitment to “further decreasing the size of the federal government to enhance accountability, reduce waste, and promote innovation,” according to the White House.

Analysts have said the elimination of the programs is no sure thing, as Congress created most of the small offices through statute. 

In addition to the CDFI Fund, which is managed by Treasury, also targeted for elimination are:

• The Federal Mediation and Conciliation Service

• The United States Agency for Global Media
• The Woodrow Wilson International Center for Scholars in the Smithsonian Institution
• The Institute of Museum and Library Services
• The United States Interagency Council on Homelessness
• The Minority Business Development Agency

These entities have been ordered to minimize their operations and personnel to the bare minimum mandated by law.

About the Fund

According to Treasury, the CDFI Fund supports community development by providing financing to community development financial institutions. “It strives to increase economic opportunity and promote community development investments in underserved areas.

In 2024, the CDFI Fund  awarded 357 Community Development Financial Institutions (CDFIs) with $408.2 million in Financial Assistance (FA) awards and through the Native American CDFI Assistance Program (NACA Program).

When it awarded its most recent funds, Treasury said the awards have resulted in “business creation and growth, new jobs, affordable housing development and increased homeownership, and increased financial services for individuals and communities in need across the country.”

Additional Statement from DCUC

In its statement, DCUC called on policymakers to recognize the “profound importance of the CDFI Fund to local communities and to our service members and to reconsider any effort to dismantle this vital program.

“For over 30 years, the CDFI Fund has empowered mission-driven lenders to reach Americans left behind by mainstream finance. CDFI credit unions, in particular, are on the front lines of financial inclusion, serving low-income communities that may not have access to traditional banking services,” the Defense Council said. “Many defense-focused credit unions operate in rural or underserved areas around military bases, ensuring service members, veterans, and their families have access to fair and affordable financial options. Notably, over 80% of military families experience financial stress, underscoring the need for trustworthy, community-based financial partners.”

‘Instrumental’ Role

In its statement, DCUC also said:

• The CDFI Fund has been instrumental in “helping credit unions fill this need by providing targeted resources to expand outreach and tailor products for vulnerable groups. CDFI certification enables credit unions to access federal funding to address crucial financial needs, including affordable housing, small business financing, and financial literacy programs.”
• Proven Economic Benefits of CDFI Credit Unions in Local Communities: “The economic benefits generated by CDFI credit unions are substantial and well-documented. By channeling public resources into community lenders, the CDFI Fund spurs private investment and fosters local growth.”
• In Fiscal Year 2024 alone, CDFI program awardees “financed over 109,000 small businesses, provided funding for more than 45,000 affordable housing units, and originated more than $24 billion in loans and investments. These numbers represent real families obtaining homes and real entrepreneurs launching businesses because of CDFI-backed credit unions.”

Case Studies

In addition, the DCUC cited several “case studies of “CDFI credit unions making a difference,” including:

• Afena Federal Credit Union, Marion, Ind.– “A small, rural credit union that received a $590,000 CDFI grant in 2022 to enhance its outreach to financially vulnerable families. With this funding, Afena expanded financial coaching and affordable loan options for low-income single parents and retirees raising grandchildren. One member was able to refinance her auto loan, reducing her monthly payment and freeing up enough money to buy new tires for the winter.”
• Fort Randall Federal Credit Union Wagner, S.D.– “Used a $3.7 million CDFI Equitable Recovery grant to broaden services across six counties, including Native American reservations where poverty rates approach 49%. The credit union introduced new lending programs and personalized credit-building assistance for tribal members and Spanish-speaking residents, opening 35 new accounts in a single month as previously unbanked residents embraced these services.”

The Consequences 

According to the DCUC, eliminating the CDFI Fund would have immediate and severe consequences for credit unions and the communities they serve. 

“Without CDFI grants and technical assistance, many credit unions would lose the resources needed to sustain their community-focused programs,” DCUC said.

What would all that lead to? According to DCUC, the result would be: 

• Reduced access to financial services for low-income Americans, forcing many to turn to payday lenders and check-cashing services. About 25% of U.S. households are currently unbanked or underbanked
• Fewer small business loans, cutting off capital for entrepreneurs in struggling communities. CDFIs have financed tens of thousands of businesses and micro-enterprises deemed too risky by traditional banks
• Economic stagnation in communities that rely on CDFI-backed lending to support job creation, affordable housing, and infrastructure development
• Additionally, demand for CDFI support already exceeds supply. In 2024, funding requests greatly surpassed available resources, proving that the program needs expansion—not elimination

The Wizardly Benefits of OZ

In its statement, DCUC called Opportunity Zones and CDFI credit unions “complementary tools.” 

“Opportunity Zones (OZs), created in 2017and strongly supported by the current administration, complement the mission of CDFI credit unions by attracting private investment to the same economically distressed communities that CDFI credit unions serve, “ the organization said. “ OZs offer tax incentives for investors who provide capital for affordable housing, local businesses, and infrastructure projects in designated high-poverty areas. By the end of FY2020, OZs had generated $48 billion in investments across 3,800 communities.”

DCUC noted many CDFIs operate withing OZ-designated areas where they have played a “critical role” in homeownership and small businesses.

No Long-Term Benefits

“DCUC firmly believes that the cost of eliminating the CDFI Fund far outweighs any short-term budget savings. Since its inception in 1994, the Fund has provided over $8 billion in awards, building the capacity of more than 1,400 CDFIs nationwide,” DCUC said. “To dismantle it now would squander decades of investment in economic development and financial inclusion.”

The DCUC is calling on the Trump administration to reverse its decision on the CDFI Fund.

“Eliminating the CDFI Fund would harm the very people who need support the most—working families, small business owners, and underserved populations, including military members and veterans. We urge policymakers to stand with CDFI credit unions and preserve this indispensable resource,” Jason Stverak, DCUC chief advocacy officer, said in a statement. “By maintaining the CDFI Fund, we can ensure that credit unions continue to empower hard-working families, support small businesses, and keep our communities—especially those that serve our nation’s defenders—strong and resilient.”

CEO Responds

In a posting on LinkedIn, Amanda Habansky, president and CEO of the $103-million peoples Advantage FCU in Petersburg City, Va. called the executive order related to “reducing unnecessary functions” including the CDFI Fund is a “smack in the face to so many organizations doing incredible work for many of the most vulnerable and underserved communities.”

Habansky said her 9,200-member credit union has been able to leverage CDFI Funding to serve its communities in “an impactful and meaningful way.”

For example, said Habansky, Peoples Advantage has over the last three years been able to make more than $50 million in loans to low-income individuals making 80% or less of the AMI.

‘Not Handouts’

“These loans have allowed our members to secure funding for reliable transportation so they can go to and from school to earn a higher living wage, payoff and reduce predatory loans often with rates exceeding 200%, start a small business to increase their earning potential, and become first generation home owners to secure and build wealth for their future generations,” Habansky stated. “These are individuals that traditional financing neglects to serve and predatory loans sharks swoop in. These are tools for financial empowerment, not handouts. Our community members deserve an opportunity to help themselves and become financially stable. I encourage my entire network to contact their federal representatives and speak out against this.”