CDFI Funding Delay Prompts Lawsuit  

Posted by Erin Hall on August 20, 2026

Two California nonprofits representing Community Development Financial Institutions have filed a federal lawsuit alleging the Trump administration unlawfully delayed CDFI Fund awards already appropriated by Congress.

The lawsuit, filed in federal court in San Francisco, asks the court to require the administration to release $289 million in fiscal year 2025 awards before the funds expire on Sept. 30, 2026, or extend their availability. It also seeks an order requiring Treasury to open the fiscal year 2026 funding round.

The complaint argues the administration is withholding funds Congress directed to the program. It cites the lack of fiscal year 2025 awards and warns that continued delays create uncertainty for CDFIs and the communities they serve.

The funding delay follows broader administration scrutiny of federal grant programs. After taking office in January 2025, President Trump issued an executive order freezing federal grants. The administration’s first budget proposal, released in May 2025, called for eliminating the CDFI Fund. In October 2025, the administration sent termination notices to CDFI Fund employees. Congress later directed the administration to reverse those terminations and appropriated another $289 million for the program in fiscal year 2025.

GoWest advocated for the release of CDFI funding earlier this year, working with legislators in April to support a congressional letter urging the administration to preserve the program and release already appropriated funds. That advocacy reflected the same concern now central to the lawsuit: delayed CDFI awards create uncertainty for credit unions and other lenders serving underserved communities.

GoWest and other credit union advocates have cautioned that administrative review should not become an indefinite delay or de facto cancellation of a program Congress chose to fund.

Posted in Advocacy on the Move, Regulatory Advocacy.