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- By Brian Edwards
- Finance
President Donald Trump signed an executive order Friday to drastically scale back the Community Development Financial Institutions (CDFI) Fund, potentially eliminating a critical source of capital for Native-owned businesses and economic development in tribal communities.
The order directs the CDFI Fund and six other federal entities to eliminate all “non-statutory components” and reduce required operations “to the minimum presence and function required by law.” This could severely impact 69 Treasury-certified Native CDFIs, which provide essential financial services in areas where traditional banks are scarce, including reservations and rural areas.
According to a recent Federal Reserve analysis, Native CDFIs already face significant capacity constraints, with only 23% able to fully meet client demand compared to 35% of non-Native CDFIs.
These Native institutions include South Dakota-based Akiptan supporting agricultural development, Four Bands Community Fund providing small business loans, Hawaii Community Lending serving Native Hawaiians, specialized credit unions like Lakota Federal Credit Union, and banks like Native American Bank serving tribal communities across 22 states from Alaska to Maine.
The Native CDFI Network, a national association representing Native financial institutions across the country, strongly opposed the executive order.
"Native CDFIs are among the most efficient financial institutions in the nation, stretching limited resources to drive economic growth in some of the most rural and remote areas where traditional banks have failed," Pete Upton, the network's CEO wrote in a statement to Tribal Business News. He emphasized that these institutions are "not just lenders—we are problem-solvers, bridge builders, and trusted partners" in Native communities.
Upton warned that any reduction to the CDFI Fund would be "a devastating blow to economic self-sufficiency in Indian Country" and urged policymakers to protect and strengthen the fund instead.
The executive order has also prompted a bipartisan response from Congress. U.S. Sens. Mark R. Warner (D-Va.) and Mike Crapo (R-Idaho), co-chairs of the Senate Community Development Finance Caucus, issued a joint statement reaffirming their commitment to the CDFI Fund.
"When the CDFI Fund was developed 30 years ago, it was created in the form of a private-public partnership to promote access to capital in our most underserved urban and rural communities," the senators stated. "Since 1994, the CDFI sector has grown to over 1400 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."
The senators noted that their caucus has grown to 28 members evenly split between 14 Democrats and 14 Republicans, highlighting the bipartisan support for the CDFI Fund's mission.
The order may also affect the New Markets Tax Credit program, which recently received applications requesting $19.2 billion in allocation authority—nearly double the $10 billion available, according to a Treasury announcement yesterday. These tax credits have been crucial for projects like the Pueblo of Laguna's water infrastructure and grocery store developments.
The order also targets the Minority Business Development Agency, which provides support to Native-owned businesses, and several other agencies including the Institute of Museum and Library Services, which provides funding for tribal libraries and broadband access.
Agency heads must submit reports within seven days explaining which functions are statutorily required, and the Office of Management and Budget is instructed to reject funding requests unless they align with minimizing operations.
The CDFI Fund's Native Initiatives program was created following a 1994 study that identified unique economic challenges in Native communities. Since 2001, it has provided more than $221 million in assistance through the Native American CDFI Assistance Program (NACA), generating over $1.6 billion in loans and investments across Native communities from 2010 to 2021.
The order comes just days before the March 21, 2025 application deadline for NACA's 2025 funding round, creating immediate uncertainty for applicants.
The White House justifies these reductions as eliminating “elements of the Federal bureaucracy that the President has determined are unnecessary.”
Tribal Business News reached out to the Treasury press office for comment, but has not heard back from it as this story went live.
EDITOR'S NOTE: This story has been updated with a statement from the bipartisan Senate Community Development Finance Caucus.
