In the context of reforming intergovernmental relations on Ukraine's path to European integration, the issue of institutional foundations for the development of United Territorial Communities (UTC) becomes particularly relevant. The purpose of the article is to analyze the main problems of socio-economic development and substantiation of the financial mechanism of functioning of the UTC on the basis of sustainability. The main tasks are to analyze the peculiarities of the formation of the financial resources of the UTC, to identify the factors of their socio-economic development. Scientific research methods such as induction and deduction, synthesis and analysis, comparison method are used. The dynamics of development of territorial communities in Ukraine has been investigated, which certifies the effectiveness of implementation of the concept of decentralization taking into account the basic principles and requirements of European integration. The peculiarities of forming the financial resources of the UTC and their intergovernmental relations with the state budget, the main forms and sources of obtaining funds for the development of territorial communities are analyzed. It is proved that budget financing, as the main form of providing territorial communities, determines the level of social and economic development. The amendments to the legislative acts aimed at better filling the budgets of the UTC are outlined. The tendency to increase the share of transfers in the income of territorial communities has been identified. The positive dynamics of the development of UTC within the scope of empowerment and obtaining additional financial resources have been identified, which provides the conditions for sustainable economic growth and financial capacity of communities. Key problems of socio-economic development and financial support of territorial communities have been systematized. Perspective directions of formation of effective mechanisms of development of UTC on the basis of sustainability are generalized. The prospect of further research is finding new opportunities for the sustainable development of territorial communities in the light of European experience. These include: supporting businesses that create jobs and increase payroll; stimulation of development of small and medium business; ensuring profitability of utility companies

Keywords: local self-government, united territorial communities, socio-economic development, sustainable development, financial resources