By: Jennifer Brazer
Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.
Fact Checked By: Brittany McMillen
Advantages and Disadvantages of Subsidiarity
Subsidiarity isn’t just a fancy term that policy wonks throw around. It’s a principle that has the power to transform governance across politics, businesses, and local communities. At its core, subsidiarity is the idea that decisions should be made as close to the people affected as possible—at the lowest level of authority that can handle the job effectively. Whether you’re considering how a city addresses its potholes or how the European Union decides on trade policies, subsidiarity shapes everything from decision-making speed to community engagement.
Like all foundational ideas, subsidiarity offers significant advantages and undeniable challenges. Let’s explore this principle, cutting through the fluff and getting straight to how it works and why it matters.
What Is Subsidiarity?
Subsidiarity traces its origins back to Catholic social teaching, where it emerged as a call to empower local communities over centralized institutions. However, the concept has since evolved far beyond religious doctrine. Today, subsidiarity informs governance models worldwide—most notably in the European Union, where it ensures decisions are made at the most appropriate level.
In simple terms, this principle opposes “bigger is always better” thinking. Instead of leaving everything to national governments, corporations, or remote headquarters, subsidiarity promotes letting local leaders, teams, or communities make decisions first—only escalating them upward when absolutely necessary.
This sounds great on paper, but how does it play out in the real world? The results, as you’ll see, are mixed.
Advantages of Subsidiarity
Faster, smarter governance
When decision-making power rests in local hands, things move quickly and efficiently. A national agency may take weeks—or even months—to decide whether a rural road repair project deserves funding. In contrast, a town council understands the issue immediately and can spring into action.
This approach also produces smart, tailored solutions. Take health services, for example. Local providers can design programs that address both regional health concerns and cultural nuances, something large-scale systems tend to overlook. During natural disasters, decentralized governance proves even more lifesaving—local authorities can mobilize resources more nimbly than a centralized response.
Community engagement and ownership
Let’s face it: most people hate decisions being handed down to them by someone who doesn’t know their challenges. Subsidiarity flips that power dynamic. Residents are brought into the process, making decisions alongside their leaders.
When people feel heard, they show up and take ownership. Whether it’s setting a school district’s budget or zoning for a new park, subsidiarity keeps governance personal and participatory. As someone who built Complete Controller to empower small businesses, I’ve seen this principle in action. Businesses thrive when local teams are equipped with decision-making authority—they know their markets better than anyone else.
A safeguard against over-centralized power
Centralized systems may look efficient on the surface, but they’re prone to bloating, corruption, and monumental disconnect. Subsidiarity spreads power across multiple levels, creating a healthy balance and reducing the risk of systemic failures. Democracy wins when local voices outnumber bureaucratic top-down dictates.
I’ve worked with entrepreneurs all over the country, and one thing’s certain—problems are easier to solve at the granular level. As the CEO of Complete Controller, I’ve seen how decentralizing bookkeeping tasks, for example, reduces mistakes and enhances accountability. Subsidiarity’s power exists in this same distributed logic.
Disadvantages of Subsidiarity
Communication breakdowns
Passing authority to lower levels sounds seamless, but without clear coordination, it can create chaos. Who’s responsible for what? When governance spans multiple layers, you need meticulous organization to avoid overlap or conflicts.
Take highway systems, for example. If regional leaders decide where roads are paved but fail to coordinate with neighboring towns, you could end up with a beautifully paved road leading… nowhere. Local leaders may also lack the training needed to handle complex issues effectively.
Uneven playing fields
One sobering reality is that not all regions have the same resources. A town with a wealthy tax base can provide world-class public services while its poorer neighbor struggles to patch potholes. As subsidiarity decentralizes power, it risks exacerbating these inequities.
We see this in small businesses, too: Companies with stronger financial backing invest in better tools and processes while smaller competitors struggle to keep up. This inequity is why I stress accurate financial reporting—you have to know your resources before making strategic decisions.
Local power, limited resources
Even the most empowered communities can’t deliver results without proper funding, staffing, or expertise. Imagine a school district tasked with building new facilities on a shoestring budget. Deciding locally doesn’t magically make money appear—it must come from somewhere.
That’s why local governments and organizations must apply meticulous, effective bookkeeping practices and build partnerships. Sometimes, subsidiarity works better as a collaborative tool, blending local agility with centralized support.
Case Study: Subsidiarity at Work in the EU
The European Union is an excellent modern example of subsidiarity in action. Decisions about trade agreements, international relations, and matters requiring cross-border collaboration are made centrally. Member states handle localized issues like education and healthcare.
This balance allows countries like France and Finland to tailor their policies while still benefiting from EU-wide standards. It’s a practical application of subsidiarity, backed by rules introduced in the Maastricht Treaty in 1992.
However, not everyone is thrilled. Critics argue the EU sometimes holds too much control over what should be sovereign matters for member states. Achieving perfect balance remains a challenge. For more, check out the EU’s principle of subsidiarity.
A Local Win: Portland, Oregon
Here’s subsidiarity at a hyper-local level: Portland’s neighborhood associations provide an excellent example of empowering communities. These groups address zoning, public services, and beautification projects by working directly with residents.
This hands-on governance keeps policies grounded in real needs. For example, when Portland leaders plan bike lanes or green spaces, they don’t do it in isolation—they partner with local voices to ensure solutions fit their residents’ priorities. It’s community-driven democracy in action.
Solving the Resource Equation
One consistent challenge with subsidiarity is funding and manpower. How can cash-strapped towns pull off the big projects they’re assigned?
The answer often lies in collaboration—whether that means finding state or federal grants or developing systems for efficient finance management. Just as entrepreneurs diversify income streams, governments must diversify funding approaches. Many resource bottlenecks can be avoided by building budgets based on real data and scalability principles.
Key Takeaways
Subsidiarity forces governance to get closer to the people it affects, breathing life into the principle that those who are most impacted by decisions should hold the greatest say. When done well, it’s a recipe for faster responses, tailored policies, and flourishing local democracy. However, challenges like inequities, poor coordination, and resource shortages remind us that subsidiarity has its limits and must be implemented with care.
For policymakers, businesses, and even thought leaders like me, subsidiarity offers lessons that apply across the board: trust your frontline to lead while building solid systems that link strategies from the bottom up.
Are you ready to scale decision-making smarter, not larger? Let’s talk about tailored governance strategies for public or private settings. Reach out for expert help from the team at Complete Controller.
FAQ
What is subsidiarity in governance?
Subsidiarity means making decisions at the lowest level of authority capable of addressing them effectively.
How does subsidiarity work for the EU?
It involves balancing centralized decisions and delegating local governance tasks to member states—for example, the EU manages trade, while national governments oversee education.
What are the main advantages of subsidiarity?
Faster, more responsive governance, community engagement, and decentralization of power.
Why can subsidiarity create challenges?
Poor coordination, funding inequities, and resource shortages are ongoing concerns.
How can subsidiarity benefit communities directly?
It empowers residents to shape policies that reflect local needs, creating stronger buy-in and loyalty.
Sources
- Complete Controller: “Advantages and Disadvantages of Subsidiarity.”
- Catholic Moral Theology: “Subsidiarity is a Two-Sided Coin.”
- CAPP-USA: “The Principle of Subsidiarity is Critically Important.”
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
