The article reveals the relevance of the study of managerial and historical preconditions for the formation of the institute of territorial communities. The purpose of the study is to identify and generalize the managerial and historical preconditions for the formation of the institution of territorial communities in Ukraine. It is shown that the formation of the institution of territorial community in the managerial and historical perspective testified to a long way of transformation of approaches to ensuring spatial socio-economic development. It is outlined that modern new challenges are forcing the world community to change the dominants of globalization processes. Under such circumstances, the functionality of territorial communities on a national scale may continue to increase. It is proved that the glocalization model of community development management will prevail in view of the effective advantages as the provision of quality social services to the population. It was found out that the balancing of powers of central, regional and local government institutions should be carried out based on the standards of living. There are various discussions about the expediency of decentralization of power and strengthening the functionality of territorial communities, including independent subjects of cooperation. According to world experience, decentralization of power is not always accompanied by decentralization of resources to finance new competencies and, as a result, a significant imbalance between delegated new powers and available financial resources has led to reduced or poor provision of social services to the population. However, democratic societies have not yet found a more effective model of public administration. Therefore, the question is not in the shortcomings of the institution of territorial communities, but in the implementation of decentralization reforms. One of the directions of the new functionality of communities is the wide opportunities for cooperation at different levels. These issues in the domestic theory of public administration are still insufficiently disclosed and require proper attention of scientists and practitioners. The applied significance of the research results is to identify the best prerequisites for the development of the institute of territorial communities. The scientific novelty of the research results is the development of aspects of inter-institutional delegation of powers in the management of the development of the territorial community. Keywords: governance; decentralization; territorial communities; local government; development.