Smart Villages in practice: new report highlights what makes community-led approaches work

The implementation of Smart Villages under the 2023-2027 common agricultural policy (CAP) takes different forms across Europe. Some Member States have introduced dedicated rural development funding interventions, while others support the approach through LEADER.

A new Rural Pact report examines these arrangements, their implementation challenges and lessons for future support.

Building on the Smart Rural 27 project, the report draws on interviews with managing authorities, LEADER Local Action Groups (LAGs), beneficiaries and other rural stakeholders, alongside five case studies from Austria, two from Finland, Italy and the Netherlands. The findings provide early implementation insights rather than a comprehensive assessment of all Member States.

Smart Villages: a strategic process, not just individual projects

A central finding is that Smart Villages should be understood as community-led, strategic development processes, rather than a particular funding instrument.

Three features distinguish the approach. First, smart does not necessarily mean only digital: innovative forms of cooperation and services also make communities ‘smart’. Second, a Smart Village strategy connects individual actions through a shared local vision. Third, the principal beneficiary is the rural community itself.

Strategies may cover a single village, neighbouring settlements or a wider micro-region, smaller than a LEADER area. However, differences remain in how managing authorities, LAGs and beneficiaries interpret the concept, particularly the distinction between integrated strategies and individual projects.

How Member States organise and fund Smart Villages

The report identifies two main delivery routes: dedicated CAP rural development interventions, including cooperation and investment measures, and support through LEADER, using LAGs' Local Development Strategies and funding mechanisms.

Operational arrangements vary considerably.

Finland supports cooperation projects through regional Economic Development Centres and LEADER LAGs. Smaller LEADER-supported projects are capped at EUR 200 000 and require at least two local partners. A separate EUR 5 000 preparatory grant helps applicants develop partnerships and project plans.

Italy uses the  cooperation intervention. Regional projects support thematic cooperation, while LAGs may integrate Smart Villages into their existing LEADER strategies. Some, including Escartons e Valli Valdesi LAG, support villages in preparing individual or joint strategies.

Lithuania uses LAGs or groups of LAGs as umbrella coordinators, bringing together local partners to implement projects under a common strategy.

Hungary moved from a planned standalone intervention to delivery through LEADER, responding to strong demand expressed through LAG Local Development Strategies.

Among countries supporting Smart Villages exclusively through LEADER, Greece has established a two-stage approach: preparation of Smart Village action plans, followed by optional implementation funding.

The report identifies no single preferred model. What matters is whether funding and governance arrangements enable community participation, strategic planning and coordinated action.

From preparation to implementation: what makes the difference?

The publication identifies early preparation as a significant factor for the quality of Smart Village initiatives. Communities need time, advice, facilitation and peer learning to identify priorities and build partnerships.

Dedicated preparatory funding is one solution. Alongside Finland's grants, the report highlights support for developing Smart Village concepts in Poland, preparatory arrangements planned in Hungary and simplified cost options in Greece.

However, funding alone is insufficient. Community facilitation requires sustained engagement, expertise and trust-building. LAGs can provide this support, but additional responsibilities are not always matched by adequate staff or resources.

Another challenge is ensuring that strategies lead to implementation. Communities may hesitate to invest in participatory planning without realistic funding opportunities.

Possible solutions include financing preparation and initial actions together, reserving implementation budgets or giving approved strategies preferential access to subsequent funding. The report identifies examples of these arrangements across several Member States.

The role of LEADER and multi-level governance

LEADER LAGs contribute territorial knowledge, established partnerships and experience in community-led development.

However, the publication distinguishes between financing individual Smart Village projects through standard LEADER procedures and helping communities develop and implement integrated strategies. The latter more clearly demonstrates the distinctive contribution of Smart Villages.

Governance must also balance community ownership with effective coordination. In line with subsidiarity, responsibilities should remain close to communities, while regional authorities can provide funding, coordination and support for challenges extending beyond individual settlements.

Lessons for future Smart Village support

Recurring barriers include differing interpretations of the concept, uneven local capacity, insufficient facilitation resources, difficulties securing co-financing and uncertainty over implementation funding.

The five case studies illustrate different approaches, from energy cooperation in Austria and digitalisation and preparedness in Finland to community facilitation in the Netherlands and strategy development through an Italian LAG.

Drawing on these findings, the report identifies six key lessons for future Smart Village support:

1. Smart Villages are defined by the community strategic process.
2. Preparation determines the quality of Smart Village strategies and actions.
3. Community facilitation is a distinct task requiring its own resources.
4. LEADER is pivotal, but its added value depends on the model applied.
5. Smart village strategies need a credible funding pathway to implementation.
6. Smart Villages apply the EU's subsidiarity principle, supported by multi-level governance.

These lessons underline the importance of strengthening the conditions for community-led development rather than adopting a uniform implementation model.

The findings offer practical insights for managing authorities, LAGs and rural stakeholders on preparing and implementing Smart Village initiatives, including in the post-2027 period.

Author: Rural Pact Support Office