Community Development Financial Institution (CDFI) credit union CEOs from California and Nevada came together on a virtual meeting this week to discuss President Donald Trump’s executive order on the CDFI Fund and its potential impact on credit unions.

The executive order has raised concerns about the future of the CDFI Fund, a vital resource. While the order is limited and must align with the CDFI Fund’s statutory functions by law, it has created uncertainty regarding future grant programs.

CEOs were joined by Jaliya Nagahawatte, financial services legislative assistant for Rep. Young Kim (R-CA). On a related note, Kim is a credit union supporter and has contacted the chair of the House Ways and Means Committee to express the importance of preserving the credit union tax exemption, another crucial topic.

On this week’s call, the following was highlighted:

• Impact on Members and Communities: Several CEOs shared powerful examples of how CDFI funding supports efforts to serve low-to-moderate-income members, promote financial inclusion, address community needs, support small businesses, offer financial education, respond to local emergencies, leverage lending to reach lower credit quality members, and eliminate fees. Their stories clearly highlighted the tangible impact of CDFI grants.
• Clarification and Interpretation: Currently, the U.S. Treasury Department has been tasked with providing recommendations regarding CDFI Fund statutory functions. The California Credit Union League and Nevada’s Credit Unions are closely monitoring this process and anticipate a joint update from the Treasury Department and the Office of Management and Budget (OMB). This information will be the key to understanding any potential impact on CDFI grants.
• Tax Policy Considerations: The League and Nevada’s Credit Unions are also mindful of the current discussions surrounding the credit union tax exemption — and are committed to protecting this exemption and making sure CDFI advocacy efforts are strategically aligned.

Credit unions are fortunate to have strong relationships with key members of Congress, including representatives on the House Financial Services Committee. These relationships are important in conveying the importance of the CDFI Fund as credit unions continually provide information regarding the good work they accomplish.

Nonetheless, the situation remains fluid as the League and Nevada’s Credit Unions actively advocate for the preservation of CDFI funding and communicate the role CDFI-certified credit unions play in local communities. Thankfully, the original codification of the CDFI Fund clearly outlines its statutory purposes. This has been helpful when explaining to members of Congress the good that CDFI institutions accomplish.

Credit union leaders should continue sharing their stories and the impact of CDFI funding with their congressional representatives whenever the opportunity arises, as these first-hand accounts are invaluable.

The League and Nevada’s Credit Unions understand these are uncertain times and appreciate your proactive engagement. Developments will continue to be monitored, and CDFI credit unions will be updated soon.