The article examines the main criteria of the concept of “financial and economic capacity of a territorial community”. It defines the main tasks of local development that impact the financial capacity of the territorial community, including the creation of an efficient social, production, and transport infrastructure and balanced environmental management, support and promotion of entrepreneurial activity, development of financial capacity that would meet the financial needs of the community, achievement of efficient use and optimal distribution of financial resources, strengthening the financial capacity of the community, implementation of long-term strategic guidelines of the community in terms of socioeconomic development, diversification of financial revenues to the community budget between different sectors of activity, improvement of the system of administration of local taxes and fees, creation of a system of financial distribution between the territories of the community on the basis of social justice, and increasing the efficiency and transparency of the use of budget funds. The authors distinguish three types of community capacity: potential or estimated capacity; a capacity that is legally recognized by the CMU; and real capacity. The article aims to generalize the theoretical experience of researchers on the issues of the financial and economic capacity of territorial communities and opportunities to address the challenges faced by the country and local governments. The article develops a mechanism for the realization of the financial and economic capacity of the community and determines that the development of the community at the local level depends primarily on 3 main factors: the community’s administrative apparatus, the socio-economic capacity of the territory, and financial capacity of the territory. The authors conclude that diversification of financial revenues to the budget and efficient use of resources to increase financial capital are the main tasks of communities in ensuring financial capacity. 

territorial community, financial and economic capacity, administrative and territorial reform, taxes and fees, capacity