Community Development Financial Institutions (CDFIs) help provide affordable capital to communities that otherwise would not have access
WASHINGTON – Senator Ruben Gallego (D-AZ) and a bipartisan group of 24 U.S. Senators are pushing back against the Trump Administration’s efforts to shrink the Community Development Financial Institutions Fund (CDFI Fund). In a letter to Treasury Secretary Scott Bessent, the senators criticized the executive order signed late Friday night, warning that cutting the CDFI Fund would harm small businesses, homeowners, and local economies across the country.
The CDFI Fund boosts economic growth in largely underserved communities that lack traditional access to financing, creating a public-private partnership to promote access to capital. Since 1994, the CDFI sector has grown to over 1,400 institutions, located in every state and territory in the nation — and leveraging at least $8 in private sector investment for every $1 in public funding received. Arizona alone has received $3.2 billion dollars in CDFI support.
“Over 1,400 CDFIs represent a significant portion of America’s financial services sector, delivering over $300 billion in financial services each year to urban and rural communities across every state,” the senators wrote. “Each year, CDFIs provide affordable growth capital to over 100,000 small businesses and finance over $100 billion in residential real estate, bringing down the cost of housing through new construction and affordable home mortgages. The important work of the CDFI sector is strengthened by the CDFI Fund, which provides seed funding to new CDFIs, grows the capacity of existing CDFIs, and provides oversight to ensure federal dollars are spent appropriately. Elimination of key CDFI Fund functions would undermine this important progress, including for small businesses and homeowners.”
The senators also pushed back on the administration’s claim that shrinking the fund would ensure more efficient use of taxpayer dollars by highlighting the program’s achievements.
“The CDFI Fund’s public-private partnership model aligns with this Administration’s emphasis on ensuring that taxpayer dollars are spent efficiently and with measurable impact. Every federal dollar injected into a CDFI generates at least eight more dollars from private-sector investment. Due in large part to the investments the Trump Administration made in the CDFI Fund in 2020, industry assets have tripled and the number of CDFI-certified entities has risen by 40 percent,” the senators continued.
The letter was led by Senate Community Development Finance Caucus co-chairs Senators Mark Warner (D-VA) and Mike Crapo (R-ID) and signed by a bipartisan group of 23 Senators, including Senator Gallego.
Read the full letter HERE.
3/20/25