State funding of political parties in Ukraine combines regulatory and budgetary functions, but creates risks of institutional dependence and requires a shift toward financial accountability

In the current context of the transformation of the public administration system and the functioning of the state under martial law, the issue of the rational and sound use of public finances has become particularly relevant.

In this context, state funding of political parties emerges as a complex and controversial public policy institution. On the one hand, it was introduced as an anti-corruption mechanism designed to reduce parties’ dependence on private capital and increase financial transparency. On the other hand, its practical implementation reveals a number of administrative contradictions related to the alignment of budget expenditures with the principles of targeted use of funds, fairness, proportionality, and effectiveness.

The problem lies in the fact that political parties, by their legal nature, are voluntary associations of citizens, whereas the state budget is funded by mandatory tax revenues. This creates institutional tension between the principle of voluntary political participation and the mechanism of compulsory redistribution of resources in favor of party activities.

In domestic research, the issue of state funding for political parties is primarily examined through the lens of constitutional and administrative law, anti-corruption policy, and the development of the party system. Significant attention is devoted to analyzing the Law of Ukraine “On Political Parties in Ukraine,” the role of the National Agency for the Prevention of Corruption in monitoring compliance with formal requirements for party financing, as well as the practice of suspending state funding in cases where inaccurate financial reports are submitted.

At the same time, in these studies, public funding is largely treated as a legal or political-institutional mechanism, while its managerial dimension within the public finance system remains secondary.

Despite a substantial body of scholarly and analytical work, a number of aspects of the issue remain under-researched. First and foremost, there is a lack of a comprehensive analysis of public funding for political parties from a perspective that would integrate budget planning, management decisions, financial control mechanisms, and an assessment of the effectiveness of public funds.

It is precisely these previously unaddressed aspects—the examination of state funding of political parties as a public management tool in the sphere of public finance, the assessment of its effectiveness and compliance with the principles of efficiency, accountability, and the fair use of budgetary resources — constitute the subject of future research on this topic.

State Funding of Political Parties in 2025–2026

An analysis of the parameters of state funding in 2025–2026 allows us to trace how formally neutral budgetary and legal mechanisms translate into practical consequences for the functioning of the party system.

In 2025, 890 million hryvnias were allocated for state funding of parliamentary political parties in Ukraine. The deviation from the formula-based calculation is due to the fact that the budget does not provide for funding of the banned pro-Russian party, the Opposition Platform—For Life (OPFL). Thus, the budgetary decision effectively reduces the total amount of funds to be distributed among the other parliamentary parties, without changing the principles of distribution within the existing financial resources.

Funds are distributed among political parties according to a two-tier model. The vast majority of funding—90%—is distributed in proportion to the number of votes received by the parties in the last parliamentary elections, while 10% of the total amount is allocated to encourage gender balance within parliamentary factions.

The situation with the “Holos” party deserves special attention. Although the 2025 State Budget formally allocated 123 million hryvnias in funding for this party, it was effectively denied the right to receive these funds due to the submission of inaccurate information in its 2020 financial reports. This case demonstrates that the state funding mechanism is not automatic and is strictly contingent upon compliance with financial reporting and transparency requirements.

In 2026, the total amount of state funding for parliamentary political parties in Ukraine will decrease to 865.5 million hryvnias. This reduction in funding is due to the “Holos” party’s permanent loss of its right to receive state funds following a court ruling. At the same time, the amount of funding approved in the budget for 2026 remains lower than the amount that should have been determined according to the formula established by law.

Summarizing the trends for 2025–2026, it should be noted that public finance management, as it pertains to the funding of political parties, formally plays a systemic role in the sphere of public integrity by combining financial support with regulatory and disciplinary mechanisms. Selective access to budget funds and the possibility of completely halting funding in the event of violations of financial reporting requirements demonstrate increased oversight and a shift in emphasis from the formal redistribution of funds to an assessment of the quality of party governance.

By its very nature, a political party is an instrument for the collective participation of citizens in the political process, not a bearer of universally binding public functions. Consequently, funding its activities from the state budget means forcibly involving all taxpayers in supporting political organizations, regardless of their political convictions, level of trust, or actual participation in party activities.

Risks and Alternatives to State Funding

From an institutional perspective, a political party’s financial capacity should be based primarily on the support of those citizens whom it actually unites and represents. Membership dues and regular voluntary donations serve as both a financial resource and an indicator of the party’s social roots.

In this context, public funding creates the risk of institutional infantilization of parties, whereby organizational inefficiency is compensated for with public funds.

First and foremost, this concerns the principle of the targeted use of budget funds. The principles of fairness and proportionality in the distribution of resources are also called into question. Using these funds to boost parties’ revenue may shift the focus from ensuring political activity to accumulating financial gains.

From the perspective of the effective use of public funds, it is problematic to finance parties’ substandard performance of their basic functions. State funding ceases to be an instrument for the development of democracy and effectively becomes a mechanism for subsidizing organizational inefficiency.

An alternative approach holds that political parties should independently build their financial base through membership dues, voluntary donations, and other lawful sources. Such a model strengthens parties’ accountability to their own supporters and promotes the formation of genuine, rather than nominal, political associations.

The elimination of state funding or its significant restriction can be viewed as a management decision aimed at eliminating a systemic flaw in the mechanisms for allocating public resources. Restricting or transforming the funding model allows for a return to sound governance logic: resources should follow trust and engagement, rather than precede them.

In the long term, a model in which the state focuses on establishing a regulatory framework, oversight, transparency, and auditing mechanisms appears more viable, while financial responsibility for the functioning of political parties rests with the parties themselves and the citizens who support them.

Conclusions and Outlook

State funding of political parties’ statutory activities in Ukraine in 2025–2026 functions as a complex management mechanism within the system of public financial management. It combines budgetary, regulatory, and oversight components and serves as a tool for the state to influence the institutional development of political actors.

It has been established that the selective implementation of the formula-based funding mechanism transforms the governance environment without altering the internal principles of fund allocation among parties, which retain their right to funding. This configuration creates additional challenges for public administration related to adherence to the principles of fairness, predictability, legal certainty, and earmarking in the allocation of budgetary resources.

It has been demonstrated that state funding performs regulatory and disciplinary functions, as mechanisms for suspending funding in the event of violations of financial reporting requirements strengthen the role of financial control bodies and judicial institutions in shaping the behavioral patterns of political organizations.

The lack of a systematic assessment of the effectiveness of fund utilization, a focus on creating measurable public value, and clear criteria for the public utility of parties’ activities limits the managerial rationale for budgetary subsidies. Under such conditions, public funding risks serving merely to stabilize the organizational existence of parties without an adequate link to their actual contribution to the development of democratic institutions and the fulfillment of state functions.

In the long term, state funding requires a rethinking as both a public policy tool and an object of strategic management. It is advisable to shift the administrative focus from guaranteed budgetary support to the creation of a system of incentives that strengthens parties’ financial responsibility, the development of internal democracy, transparency in decision-making, and accountability to citizens.