<![CDATA[Efforts to achieve regional fiscal independence in Indonesia continue to face significant challenges, particularly local governments' heavy reliance on Transfers to Regions (Transfer ke Daerah, TKD). This study aimed to examine the potential development of Regional Endowment Funds (Dana Abadi Daerah, DAD) as sustainable financing instruments for regional development, as stipulated in Law No. 1 of 2022 concerning Financial Relations between the Central Government and Regional Governments. The study employed a descriptive qualitative approach using policy analysis, drawing on secondary fiscal data from the Ministry of Finance (2021–2026), the Regional Fiscal Capacity Map, Minimum Service Standards (Standar Pelayanan Minimal, SPM) data from the Ministry of Home Affairs' e-SPM system, regulatory documents, and case studies of Bojonegoro Regency and Aceh Province. The analysis was supplemented by international benchmarking of endowment fund practices in Norway, Alaska, Singapore, and Alberta. The findings indicated that 56 local governments met the fiscal capacity criteria for establishing DAD, while only 39 met both the fiscal capacity and SPM compliance criteria. The primary challenges to DAD development were not related to the absence of a legal framework but rather to the availability and readiness of funding sources, institutional capacity, investment management expertise, and continuity of political commitment across successive administrations. The findings suggested that DAD could serve as a long-term financing instrument to support sustainable public service delivery and facilitate blended finance arrangements and collaboration with development partners, philanthropic organizations, and the private sector, provided that governance structures, institutional capacity, and long-term political commitment were strengthened.]]>
