On March 14, President Trump announced a presidential action directing the Community Development Financial Institution (CDFI) Fund, Minority Business Development Association (MBDA), and other targeted federal agencies to eliminate “non-statutory components” and to “reduce the performance of their statutory functions and associated personnel to the minimum presence and function required by law.” While this action is consistent with Trump’s anti-racial-equity rhetoric and with DOGE’s illegal attempts to shrink the federal government, it is not clear what it actually means or what it will change. Just hours before this action, Trump signed a budget bill that would maintain 2024 funding levels through 2025. Further, the primary mission and functions of each of these programs are clearly consistent with the statutes that created them.
The CDFI Fund was created by the Riegle Community Development and Regulatory Improvement Act of 1994. Housed within the U.S. Treasury, the CDFI Fund provides financial assistance to financial institutions that “have a primary mission of promoting community development”. This financial assistance comes in the form of grants and other investments, tax credits and bond guarantees that more than 1,400 CDFIs across the country use to finance affordable housing, small minority-owned businesses, green energy, disaster recovery and other projects in rural areas, Tribal lands and disinvested urban communities.
The Minority Business Development Agency (MBDA) was established by President Nixon in 1969 as the Office of Minority Business Enterprise. The agency is housed within the Department of Commerce and became a permanent federal agency in 2021 with the passage of the Infrastructure Investment and Jobs Act (IIJA). The creation of the agency was intended to help overcome the social, economic, and legal discrimination faced by members of minority racial and ethnic groups that prevented them from fully participating in the market. Since 1981, MBDA has operated a network of business centers and technical assistance programs that help minority business enterprises (MBEs) with technical assistance for gaining greater access to capital and contracting opportunities and developing strategies for expanding into new markets.
Impact:
The combined budgets of the CDFI Fund and MBDA are under $500 million dollars. While just a miniscule portion of the federal budget, and far from the level of investment needed to actually infuse underserved communities with adequate capital resources, the services they provide are critical lifelines to the individuals and communities they serve. It is not clear that President Trump actually has any legal authority to cut staff or limit the activities of the agencies, as their programs are currently authorized and funded by Congress. If President Trump acts outside of his authority to slash the agencies’ work, credit unions, small community financing organizations, and small businesses in communities around the country will risk losing key sources of public investments and support.