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Purpose. The purpose of the study is to determine the state, identify the main challenges and risks affecting rural development in Ukraine, and assess their influence on the effectiveness of functioning and financial capacity of rural territorial communities in the conditions of power decentralization and self-government reform. Methodology / approach. The methodological basis of the research was a systematic approach to the study of the investigated phenomena and processes and the dialectical method of cognition, as well as general scientific and special methods. In order to assess the state and trends of rural development in Ukraine, economic and statistical methods were used in analytical studies (comparative analysis to compare the results obtained in certain years, average and relative values, trend analysis, index analysis, etc.). This was done to establish certain relationships, such as identity, similarity, or difference between characteristics and facts. To determine the influence of individual factors on the operational efficiency and financial capacity of territorial communities, multiple correlation and regression analysis was used. A number of abstract-logical techniques made it possible to formulate intermediate and final conclusions and proposals. Results. Current conditions are analyzed and trends of rural development in Ukraine for 1990–2022 are determined. It was found that over the past 32 years, the socio-economic crisis in rural areas continues to worsen, which is manifested in declining employment rates, increasing unemployment, rising poverty, mass migration of peasants, deterioration of infrastructure and access to social services. The main challenges and problems of rural development have been identified and systematized by groups: socio-demographic, economic, environmental and nature protection, institutional, political. To assess the factors influence on the effectiveness of functioning and financial capacity of territorial communities, a multifactorial correlation and regression analysis was conducted. It was found that the level of capital expenditures is most affected by the fiscal return of the community territory per 1 inhabitant. Originality / scientific novelty. The elements of scientific novelty consist in the introduction of a systematic approach to generalizing challenges and problems affecting the development of rural areas and communities, which were systematized by groups: socio-demographic, economic, environmental and nature protection, institutional, political. The scientific and methodological foundations of studying the socio-economic situation in Ukraine’s rural areas in terms of determining the factors and assessing their influence on the effectiveness of functioning and financial capacity of rural territorial communities have been further developed. Practical value / implications. The identification of factors and their influence on the functioning effectiveness and financial capacity of rural territorial communities can be taken into account by state institutions when reviewing previously adopted documents and elaborating strategic plans for the restoration and development of Ukraine’s rural areas, taking into account internal threats and the long-term external aggression of the russian federation against Ukraine.
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