The KfW Municipal Panel 2025 shows that the mood in municipal treasuries has deteriorated sharply. They are increasingly pessimistic about their current and future financial position. Nearly one in five municipalities is unable or only partly able to adequately maintain their infrastructure and the perceived investment backlog is rising significantly. Given that their coffers are almost empty, grants are becoming increasingly important for municipalities to finance investment. Promotional funds – purpose-tied grants or allocations from the federal or state government or the EU – make up around one fifth of all funds used for municipal investment. But time-consuming application procedures and documentation requirements tie up many resources in municipalities. Appropriate structural reforms can help enable promotional funds to be invested more quickly and more efficiently.