What CDFIs Need to Know About the President’s 2026 Budget Proposal

The President’s FY 2026 budget request, released May 2, proposes to eliminate discretionary award funding for the CDFI Fund, retaining $33 million for administration of past grant awards and continued CDFI certifications, but also introducing a new $100 million Rural Financial Award Program. The budget’s language also reflects a more pointed critique of existing award programs than seen previously, in keeping with this administration’s combative tone. At first glance, this may feel concerning, but it’s not the first time a Trump budget has proposed sweeping changes. History (and bipartisan support in Congress) has consistently shown that proposed cuts don’t necessarily translate into final outcomes.

So what should CDFI leaders take from this year’s budget proposal?

This is Familiar Territory

There are more similarities than differences between this first “skinny budget” of Donald Trump’s second term and the proposed budgets of his first term. To compare them:

• Every budget request of that first term requested just $14 million for administration of the CDFI Fund, and this request was $33 million for the same.

• All the years’ requests mentioned eliminating all funding for discretionary awards but maintaining support for existing award compliance, CDFI certification, and support for the New Markets Tax Credit and the Bond Guarantee programs.

• All of the proposed budgets used the language that the CDFI Fund has matured and has access to capital now, no longer needing “startup” or “seed” money. This argument appears to misunderstand how most CDFI award funds are used.

Despite all this, the budget allocated to the CDFI Fund grew or stayed stable every year during Trump’s first term – overall increasing from $248 million annually the year before he took office to $270 million in the last year of his term.

But There Are Also Some Differences

As we’ve come to see in many areas, Trump’s approach to executive power in his second term has a decidedly more dramatic flourish and comes with some surprises. But not all of the surprises are bad.

The FY 2026 budget request added a new $100 million Rural Financial Award Program to be administered by the CDFI Fund, with the aim of supporting investment in rural communities. This could also explain the increased budget for administration mentioned above.

The new budget proposal also added an additional argument against funding the remaining Fund awards, and it’s one that is not surprising based on the March 14 Executive Order that threatened the Fund (and was met with swift response from industry advocates and Congress alike). The 2026 budget request was accompanied by a document entitled “Cuts to Woke Programs” that accuses the Fund of making award determinations based on race and criticizes CDFI networks as “advancing racial justice.”

Summing it Up

While the President’s budget request makes headlines, it’s Congress that controls the final funding decisions—and history tells us that lawmakers from both parties understand the importance of CDFIs. During President Trump’s first term, Congress not only rejected similar proposed cuts but increased the Fund’s budget. We also saw a swift, bipartisan defense of the Fund following the March 14 Executive Order, reinforcing that support remains strong on Capitol Hill. The fact that this year’s request includes $100 million for a new award program seems to even indicate that the administration is recognizing the value and importance of CDFIs as part of the country’s economic engine.

Given delays in last year’s budget process, we’re likely headed for another round of Continuing Resolutions before a final FY 2026 budget is approved. That timeline gives CDFIs a window of opportunity to make their voices heard.

This is a good opportunity to make sure that your lawmakers understand the importance of the CDFI Fund. The CDFI Coalition’s advocacy page is a good place to start, with a template for a letter you can send today asking your Representative to sign the bipartisan Bacon-Tran letter urging a full CDFI Fund appropriation at $324 million. The work CDFIs do is vital—and ensuring continued federal investment requires making that case loud and clear.