Donald Trump launched a dramatic shift in US policy as he returned to the White House, issuing a flurry of executive orders for the suspension and reconsideration of federal programmes – including a variety of funding programmes for co-ops and credit unions domestically and overseas.
After the orders prompted a number of legal challenges, they were rescinded – but uncertainty now hangs over a range of co-op initiatives, from green power funding for electric co-ops under Joe Biden’s Inflation Reduction Act to collaborations in Ukraine and elsewhere between the US Agency for Overseas Development (USAID) and the World Council of Credit Unions (Woccu).
Projects at stake
In its final weeks, the Biden administration backed several co-op initiatives, including US$4.37bn sent to rural electric co-ops to pursue clean energy projects, as part of the US Department of Agriculture’s (USDA) Empowering Rural America (New Era) programme. The fund was created to support work to reduce climate pollution, lower electricity costs for communities and create green jobs across rural areas of the US.
In Ukraine, Woccu and USAID have been working together for several years to boost the credit union sector through their Grow project. Last month they announced a further $1.5m for micro, small and medium-sized businesses through a credit union liquidity fund.
Also announced last month was a partnership by US co-op apex NCBA Clusa and the US Federation of Worker Cooperatives (USFWC) to raise awareness of the worker co-op model in Madagascar, Kenya, Guatemala and Peru.
The project provides coaching services for agricultural and dairy/livestock co-operatives in Madagascar, which is home to a small number of worker co-ops. Through the peer learning sessions, the project aims to help strengthen their operations and broaden their horizons about the possibilities of their businesses. US worker co-operative members of USFWC will also be able to learn from learn from their Malagasy counterparts.
Such collaborations between the federal departments and the co-op movement now face an uncertain future, with courts preparing to decide their fate.
Related: Co-ops react to Trump’s sweeping election victory
A statement from Woccu said: “USAID this week issued stop-work orders for all three international development projects that Woccu implements on its behalf through credit unions.”
As a result, Woccu has suspended work on the Grow project in Ukraine; the Economic Inclusion Project in Peru and Ecuador, which stimulates credit union lending and savings to Venezuelan migrants and refugees; and the Cooperative Development Program’s Accelerating Growth and Inclusion in Lending for Credit Unions Project in Burkina Faso, Guatemala, Kenya and Senegal.
Woccu said it “welcomes the review of foreign aid programs and the effective use of all the funding it receives from the US government, just as we would from our private donors, investors and members.
“We remain committed to the co-operative principles that are shared by our vast membership across the world and look forward to continuing our partnership with USAID in advancing economic opportunities through credit unions.”
On 3 February Woccu sent a letter to US Secretary of State Marco Rubio stressing the strategic importance of the USAID-funded financial inclusion projects WOCCU implements through credit unions in eight countries and asking he honor USAID’s existing funding obligations.
“USAID funding has allowed us to leverage millions of dollars of private capital through credit unions to increase the incomes of individuals, create jobs, support local economies and deliver what has become a global movement of self-sustaining, local financial institutions that do not depend on aid, but rather mobilize domestic savings and make people’s money work for them,” read the letter by Woccu president and CEO, Elissa McCarter LaBorde.
“By fostering economic self-reliance through trusted financial institutions, USAID and Woccu help counter economic desperation, crime and instability—stemming further illegal immigration to the United States. At Woccu, we believe in foreign assistance programs that deliver measurable, long-term benefits for both the developing world and the American people. However, the nature of this sudden blanket freeze on aid has put organizations such as ours in a precarious financial and legal position, and it has put our employees—American citizens here and abroad—at significant personal risk,” it added.
The letter was sent a week after USAID had issued stop work orders on all three of Woccu’s current USAID-funded projects at the direction of the U.S. Department of State.
“We urge you to honor the equitable adjustments for existing obligations of funding for organizations that have been put under duress with little guidance on how to recover their immediate operating costs, and honor payments still pending for work completed prior to the stop work orders,” wrote McCarter LaBorde.
In a post on its website, USFWC said: “We know that the recent federal orders have caused uncertainty and concern, and we are working hard to understand the implications for workers and co-operatives.
“On January 27, there was an order issued by the White House Budget Office to pause all federal loans and grants. This of course affects millions of people and will have a direct effect on our members and ecosystem. We are working with our partners at NCBA Clusa and others on this.”
America’s Credit Unions (ACU) posted on its website that the Small Business Administration programme, Community Development Financial Institution (CDFI) Fund, the National Credit Union Administration’s Community Development Revolving Loan Fund (CDRLF), and Greenhouse Gas Reduction Fund, were among those frozen – although this was subsequently rescinded.
“Many credit unions access capital through federal grant programs to put dollars to work in communities,” said America’s Credit Unions chief advocacy officer Carrie Hunt. “The CDFI Fund and CDRLF have long been essential to supporting low- to moderate-income households across the country.
“Newer grant programs also provide capital for home equity loans, electric vehicles, and other home improvements. America’s Credit Unions has provided agencies with our perspective on these programmes.”
Electric co-ops
NRECA, the apex for the USA’s electric co-ops – which had taken a critical line on some of the Biden administration’s energy policy – welcomed some of the changes announced by Trump.
Trump’s orders include accelerated oil and gas drilling, the approval of energy development projects, and the removal of red tape surrounding federal permissions.
“As electricity demand skyrockets, America is facing major electric reliability challenges that require bold and decisive action,” said NRECA CEO Jim Matheson. “President Trump’s swift reset of American energy policy appropriately prioritises smart energy policies.”
He added: “In recent years, federal agencies have taken numerous policy actions that jeopardise the nation’s grid and hamper the ability of electric co-operatives to keep the lights on across rural America. We need more power, not less. These early Trump actions help put our nation on a better path by acknowledging this simple fact.”
But NRECA is also getting ready to advocate for continued federal funding. Matheson said electric co-ops “have a strong case to make that they are using the federal funds they receive to bolster grid reliability”, adding: “We look forward to discussing how electric co-ops are leveraging numerous federal programmes to shore up the electric grid in local communities across the nation.”
Political playbook
On 30 January, NCBA Clusa held an online town hall to discuss government relations and present its Cooperative Business Playbook.
This calls for the continuation of favourable tax provisions for co-ops – which are set to expire this year. The tax exemption of credit unions remains a contested issue, subject to frequent challenges by the corporate banking sector.
The playbook also argues for the placing of co-ops at the centre of the care sector, the continuation of state funding for co-ops across all sectors and action by the Small Business Administration to level the playing field for co-ops in its loan programmes.
And it advocates for a role for co-ops in tackling the housing crisis, food insecurity, rural development and broadband provision.
NCBA Clusa CEO Doug O’Brien told the town hall: “Obviously, there is a huge conversation going on in Congress now. We’re engaged with America’s Credit Unions and the rest of the co-operative and credit union community as they engage in the ‘Don’t Tax My Co-op’ campaign.
“We continue our work on ensuring that co-operatives can access capital through the Small Business Administration. We know that housing co-operatives are a real solution in the housing crisis, there’s a lot more interest in worker co-ops, you know, particularly around transition from small businesses to worker co-ops.”
This agenda will be impacted by Trump’s executive orders on energy policy and climate; on gender, on diversity equity and inclusion (DEI); and international development assistance funding.
In these areas, contracts and co-operative agreements drawn up under the previous administration now face a 90-day suspension while they are reviewed.
“What occurs after that review is not certain,” said O’Brien. “That’s part of the theme on the executive orders, it is a very fluid and evolving situation.”
After a legal challenge, those executive orders were rescinded, but the administration then said that certain programmes would remain suspended and under review.
“It goes back and forth, and back and forth,” said O’Brien, “and there’s some really important litigation that’s occurring that can impact both the near term and the long term of these awards.”
Underlying the legal challenges to the executive orders are questions over how much authority the government has to cancel contracts. This could produce a variety of outcomes, said O’Brien.
“Different programmes have a different level of Congressional directive, some that provide the agency or the department with more discretion than others. It could vary across different types
of programmes.”
In terms of NCBA Clusa’s own work, he said the apex had been issued notices to stop work on 10 projects undertaken in partnership with USAID.
Going forward, co-ops still have some advantages. Aaliyah Nedd, government relations director at NCBA Clusa, said: “We have support across various sectors, strong partners who are with us every day in this work, and key supporters across the federal government, in the halls of Congress, who understand the difference that co-operatives make.”
She told the meeting it is important for co-operators to use the visibility brought by the International Year of Cooperatives “to build those relationships and that support across the board”.
O’Brien added: “Co-operatives do have great appeal to different types of policy agenda. In a policy agenda that really focuses on building markets, on creating prosperity, a policy agenda that focuses on creating safer communities or stronger communities, co-ops have an answer. Co-ops create jobs. Co-ops create more economic activity in local communities. Co-ops provide the stability … so that people can stay in their communities, so that they can enjoy greater security.”
For co-ops to enjoy favourable policy, he said, they “should be talking about” this potential – and NCBA Clusa will be providing materials and support this year to help with that advocacy.
This article was last updated on 13 February.
