Methodical Approaches to Assessing the Financial Potential of Territorial Communities

Abstract

Abstract: Modern transformations in local self-government, the deepening of decentralization processes, and the impact of wartime conditions significantly complicate the formation and assessment of the financial potential of territorial communities. The absence of a unified methodological system capable of integrating basic budgetary indicators with prospective development metrics necessitates a rethinking of approaches to analysing financial potential. Under such conditions, comprehensive assessment becomes essential for determining not only the current level of financial capacity but also the long-term resilience and recovery capabilities of communities. The purpose of the article is to generalize scientific approaches and develop methodological principles for a comprehensive assessment of the financial potential of territorial communities by combining basic and prospective indicators, thereby enabling the evaluation of their financial capacity and resilience in the context of decentralization and wartime challenges. The research methodology is based on a systematic analysis of scientific sources, legal documents, and open financial and statistical data. Comparative analytical methods were employed to evaluate the dynamics of financial potential in territorial communities from 2021 to 2024. A structural-functional approach was used to identify the role of revenue, expenditure, transfer, and investment components within the structure of financial potential. Results. The study proposes an improved assessment system for financial potential encompassing fifteen indicators grouped into five blocks: revenue capacity, transfer dependence, expenditure efficiency, territorial return, and prospective potential. Applying this system to urban territorial communities of the Kharkiv region for 2021–2024 revealed significant spatial heterogeneity. Communities with diversified economic structures, strong tax bases, and active investment dynamics demonstrated higher resilience to wartime and economic shocks. In contrast, frontline communities experienced greater dependence on transfers, declining own-source revenues, and limited budgetary flexibility. Conclusions. A comprehensive assessment of financial potential based on both quantitative and qualitative indicators provides a more complete understanding of the financial capabilities and risks of territorial communities. The proposed system can serve as a tool for strategic planning, budget optimization, and decision-making in the context of post-war recovery. Enhancing the financial potential of communities requires expanding budget autonomy, strengthening investment activity, and improving the institutional capacity of local self-government.