What’s At Stake in the Unraveling Of The CDFI Fund?

Read Natalie Madeira Cofield’s original piece in Forbes here.

The Fund’s potential dissolution could dismantle a 30-year infrastructure of capital access for small businesses and community finance institutions across the country.

For more than three decades, the Community Development Financial Institutions (CDFI) Fund has stood as one of the nation’s most effective vehicles for expanding access to capital in rural and urban communities often left behind by traditional finance. Its network of more than 1,400 mission-driven lenders has deployed billions of dollars in small business loans, homeownership programs, and community facilities, all with one goal: to ensure that opportunity is not defined by ZIP code.

That infrastructure now faces an uncertain future. In early October, the entire staff of the CDFI Fund—housed within the U.S. Department of the Treasury—received Reduction in Force notices stating that their positions would be eliminated by December 2025. The move follows a series of administrative actions that have paused operations and created widespread uncertainty about the Fund’s continuity.

The announcement came amid a flurry of recent developments. On September 24, the agency released an amended FY 2025 Notice of Funding Availability for its core CDFI Program, followed by the announcement of $8.8 million in Technical Assistance Awards to 56 community lenders on September 30. When federal funding temporarily lapsed on October 1, staff were placed on furlough; ten days later, the Reduction in Force notices were issued.

The CDFI Fund’s role in the financial ecosystem cannot be overstated. Collectively, certified CDFIs manage hundreds of billions of dollars in assets, serving as crucial conduits for credit and capital in communities where commercial lending is limited or unavailable. These institutions have long operated as the first line of financial response during moments of crisis—from the COVID-19 pandemic to natural disasters—bridging market gaps with flexible, locally attuned financing solutions.

Eliminating or restructuring the Fund would have ripple effects across the U.S. economy. Banks that rely on CDFI partnerships to meet Community Reinvestment Act goals could face reduced collaboration opportunities. Entrepreneurs and small businesses might encounter diminished access to startup or bridge capital. And local economies that depend on CDFIs to finance housing, small manufacturing, and community facilities could face deepening inequities in capital access.

It is worth noting that support for CDFIs has historically transcended politics. The Fund was created in 1994 through bipartisan legislation, and its work has continued under successive administrations from both parties. The Senate CDFI Caucus, co-chaired by Senators Mike Crapo (R-ID) and Mark Warner (D-VA), now includes 30 members, equally divided between Republicans and Democrats—reflecting shared recognition of the economic value these institutions bring to communities nationwide.

For every federal dollar invested, CDFIs have historically leveraged between six and eight dollars in private and philanthropic capital—a multiplier effect that amplifies each taxpayer dollar into local economic growth. They are not subsidies but catalysts—helping unlock investment in communities that strengthen the national economy as a whole. In many towns and neighborhoods, they are the only financial institutions maintaining a local presence.

As the financial and policy community awaits further clarification on the Fund’s future, one fact remains clear: the CDFI network is an essential component of America’s financial infrastructure. Ensuring its stability is not a partisan issue; it is a matter of economic resilience and national competitiveness.

The coming months will determine whether the nation continues to sustain this critical channel for inclusive growth. Policymakers, business leaders, and financial institutions alike would do well to remember that a strong economy depends on participation—and participation depends on access.

The Fund’s potential dissolution could dismantle a 30-year infrastructure of capital access for small businesses and community finance institutions across the country.

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