Community and Economic Development
Last Updated, April 7, 2025
Build Back Better Regional Challenge grants phased out.
EDA economic adjustment assistance grants eliminated.
Treasury’s CDFI Fund facing large reductions.
Rural Partnership Program scrapped entirely.
Grants being cut or changed
Federal grants focused on community revitalization and economic mobility have been targeted for steep reductions or elimination. Key programs under the Economic Development Administration (EDA), including the Build Back Better Regional Challenge and local economic adjustment assistance grants, are being phased out. Additionally, programs that supported rural community development—especially in coal-impacted or persistently poor areas—are on the chopping block.
Eliminations or restructuring
The Department of Commerce has proposed eliminating several regional innovation programs and instead consolidating economic development efforts under a narrower set of business-focused initiatives. Grants that had focused on equitable development, entrepreneurship among underserved populations, and main street revitalization have been deprioritized. The Community Development Financial Institutions (CDFI) Fund at the Treasury Department is also facing large reductions, limiting access to capital for nonprofit lenders and local development groups.
On hold or court challenges
Some pending awards from the EDA and CDFI Fund were paused during the January 2025 freeze and are still delayed. Legal efforts are underway to challenge the administration’s authority to cancel previously obligated funding, especially in regions that had already launched programs based on federal awards. Meanwhile, Congress is debating whether to reinstate funding in the 2026 appropriations process.
Timeline
Economic development cuts are scheduled to begin in FY2026 (starting October 2025), but many communities are already feeling the loss of technical assistance and partnership opportunities. Some regional economic strategies were built around multiyear federal support that now may not materialize.
State-level impact
Appalachian states like Kentucky, West Virginia, and Pennsylvania were among the largest recipients of rural and coal community economic development funds. Their loss threatens dozens of community planning projects and entrepreneurship hubs. In Ohio and North Carolina, local government and nonprofit-led economic mobility initiatives are facing sudden gaps in expected capital. South Carolina and Tennessee had just begun implementing place-based community reinvestment strategies tied to EDA funding that may now be defunded before results are achieved.
Sources
Economic Development Administration. (2025, February 28). FY2026 Budget Proposal Summary. https://www.eda.gov/newsroom/fy2026-budget-summary
Treasury Department. (2025, March 10). CDFI Fund updates and program pauses. https://www.cdfifund.gov/news/cdfi-fund-2025-program-update
NPR. (2025, March 18). Biden-era rural development grants face cuts. https://www.npr.org/2025/03/18/rural-grants-cuts-economic-development
Appalachian Regional Commission. (2025, March 25). Statement on federal budget proposals. https://www.arc.gov/news/fy2026-budget-response
