Subventions: How Can Local Communities Officially Support the Military?
Since the beginning of russia’s full-scale war against Ukraine, local communities have actively sought ways to support the Armed Forces. One of the most effective legal mechanisms for such assistance is a subvention—a structured financial transfer that allows municipalities to allocate funds directly toward defense needs. But what exactly is a subvention, how does it work, and why is it one of the best ways for local governments to contribute to national security?
What Is a Subvention?
A subvention is a designated financial transfer between budgets that can only be used for a specific purpose determined in advance by the granting authority. This subvention meaning is outlined in Ukraine’s Budget Code.
Unlike subsidies, which do not require specific allocation or repayment, a subvention must be spent strictly according to its designated purpose. If the funds are misused or not utilized within the designated timeframe, they may need to be returned.
Types of Subventions: State and Inter-Community Transfers
Two primary types of subvention cash transfers are those from the national budget to local governments and those exchanged between municipalities.
A state subvention refers to funds transferred from the national budget to local governments to support specific sectors, such as:
Education
Social protection programs
Public investment projects
Risk compensation for populations living in hazardous zones
Construction, repair, and maintenance of roads and public infrastructure
These expenditures are planned annually and outlined in the state budget law.
A subvention can also be provided from one local government to another. These transfers typically fund:
Maintenance of shared infrastructure or addressing its negative impacts
Implementation of public investment projects
Information on such inter-community transfers can be found in local budget amendments.
Subventions for the Armed Forces
Since russia’s invasion of Ukraine, communities have been authorized to allocate subvention cash for defense purposes. In 2023 alone, the Ministry of Defense reported that subventions contributed over 16 billion UAH to support the military. These funds were allocated under the budget program for the operational needs of the Armed Forces, including personnel training, medical care, and veteran support.
This is an example of a subvention from a local budget to the national budget. Previously, such transfers were limited to social and economic development projects. However, the scope has since expanded, enabling direct financial contributions to national defense.
How Do Local Governments Allocate Subventions?
For any subvention, a formal agreement must be signed between the funding municipality and the recipient, whether it is the Cabinet of Ministers, the Ministry of Defense, or a specific military unit.
If a subvention does not have a predefined target, the recipient may allocate the funds based on priority needs within the framework of the budget program.
A separate type of subvention is the direct transfer of local budget funds to military units. This process is typically faster, as it is carried out based on requests from military commanders. While municipalities cannot independently purchase military equipment or weapons, there are no restrictions on how an army unit may spend the received funds. These subvention cash transfers can be used to procure drones, construct fortifications, or fulfill other urgent defense needs.
However, local governments can only allocate subventions from surplus funds or additional revenue beyond planned expenditures. Redirecting funds earmarked for other purposes in the approved budget is not permitted.
Why Are Subventions an Effective Mechanism?
While a subvention is not an instant solution to all military needs, it is a powerful and legally structured alternative for municipalities that cannot directly purchase military equipment or fund defense-related projects.
Unlike volunteer donations, which can be deployed more quickly, a subvention ensures transparency and accountability, giving local communities confidence that their budget contributions are being used to strengthen Ukraine’s defense.
With the war continuing and defense costs rising daily, subventions offer a crucial mechanism to bolster the security sector and provide essential support to the Armed Forces.