OMB will release CDFI funding

• Key insight: The Office of Management and Budget had been withholding funds slated for Community Financial Development Institutions because the Trump administration claimed that they supported diversity, equity and inclusion causes that it opposes. 
• What’s at stake: Many banks are also CDFIs, and many large institutions use their grants and other awards to partner with CDFIs to achieve their Community Reinvestment Act goals. 
• Forward look: The Trump administration is still trying to reduce the fund, proposing a budget that would slash funding. 

WASHINGTON — The Office of Management and Budget is releasing money for the Community Development Financial Institutions Fund, multiple people familiar with the issue said. 

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The CDFI Fund has been a target of the Trump administration since the White House issued an executive order aiming to dissolve the program last year. OMB had up to this time not undergone the necessary steps to release the funds to Treasury, which Treasury then disburses to community financial institutions. 

The case is a rare example of Republican lawmakers publicly pushing back against the Trump administration. Many Republican lawmakers have long championed the program, which has a disproportionate positive effect on deeply red states. 

Sen. Mark Warner, D-Va., co-chair of the CDFI Caucus in Congress, also confirmed the release of the funds in a statement. 

“I am pleased that the Treasury Department is finally releasing the remaining FY25 funds for the Community Development Financial Institutions Fund, following sustained bipartisan pressure to get these resources out the door,” Warner said. “That said, it is unacceptable that it took months to move these funds, and alarming that the Fund itself has faced repeated attempts to weaken its capacity, despite rising demand from the people and small businesses that depend on these programs.” 

Still, the Trump administration’s attempts to change the program aren’t finished. The White House’s budget includes a significant slash to the Fund’s budget — similar to what it proposed in its last budget, but that Congress rejected as it continued to fully fund the program. 

And the Treasury Department on Thursday — the same day that OMB released the funds — issued a statement about ensuring that the funds only go to U.S. citizens. 

“Under President Trump’s leadership, we are enforcing the law and preventing the abuse and misuse of CDFI Fund grants intended solely for American citizens and lawful residents,” Treasury Secretary Scott Bessent said in a statement. “Treasury will continue to use its authority to prevent waste, fraud, and abuse in all forms, including by safeguarding taxpayer money awarded by the CDFI Fund.”

The Treasury Department will propose a rule clarifying that the funds only go to citizens, which is already required by law. 

Treasury will also add a provision to that rule “to ensure certified CDFIs do not engage in practices that violate federal anti-discrimination laws, including providing employment or financial preferences or set-asides based on race, ethnicity, or sex in a manner inconsistent with federal laws.” 

That provision will mean that certified CDFIs will have to implement policies to this end, and will have to make those available to the Treasury Department.