Scottish Rural Communities Policy Review: stage 2 - Finland case study

7. LEADER in Finland

7.1 Implementation of LEADER

LEADER has played a central role in Finland’s targeted (“narrow”) rural policy ever since it started in Finland. This section examines the implementation of LEADER in Finland during the current programming period (2023–2027), including the Common Agricultural Policy’s (CAPs) transitional years (2021–2022). Where relevant, references are also made to the previous programming period from 2014–2020. The sections below provide an overview of the key features of CLLD/LEADER, as defined in the EU regulations, and in terms of how they are implemented in Finland.

Sub-regional area (place based)

There are 52 LEADER areas in mainland Finland and one in the autonomous Åland Islands. The geographical size of Local Action Group (LAG) areas ranges from just over 1,000 km² to more than 15,000 km². Population coverage varies between approximately 18,000 and just over 100,000 inhabitants per LAG. On average, each LAG includes six municipalities.

According to the guidance issued by the Ministry of Agriculture and Forestry (MMM), the recommended minimum population for a LAG is 20,000 inhabitants to ensure sufficient critical mass. Proposals below this threshold required justification. Voluntary mergers between LAGs were encouraged, with incentives offered to those that chose to merge. Overall, the geographical coverage of LAGs has remained largely consistent with the previous programming periods (2007–2013 and 2014–2020). Two LAGs merged in 2020 to strengthen their population base. A map of the current LAGs, along with their contact information, is available at: www.leadersuomi.fi

Ministry of Agriculture and Forestry has a detailed formula for distributing funding amongst the 52 LEADER areas. In short, the funding allocated to each LEADER group is based on the quality of its local development strategy and the size of its population, with extra weight given to residents in core and sparsely populated rural areas. Special features, such as group mergers, bilingual regions, or long distances, may also be taken into account.

Local Action Groups (local partnerships)

In Finland, LAGs are legal entities established for the LEADER approach and registered as non-profit associations, governed by the Finnish Associations Act (503/1989). LAG boards are partnerships composed of representatives from the local public, private, and third sectors, in accordance with the Finnish LEADER model's principle of tripartite representation with equal shares. MMM guidelines limit the consecutive LEADER board membership to six years to ensure rotation and enhance fair representation. Compliance with the tripartite composition and the rotation rules must be reported through the annual reports to the Ministry of Agriculture and Forestry.

A strict tripartite LAG composition has been a distinct feature of the Finnish LEADER model from the very beginning. Inspired in part by the Irish approach at the time, it was seen as a means to ensure a balance amongst the various stakeholders to ensure that levels of influence were as equal as possible to avoid any voices becoming too strong, or conversely, marginalised; in short, it is enforced to ensure a balanced, bottom-up governance structure for LAGs.

According to a Network Unit survey in 2024 (reported in the annual report), youth LEADER activities in Finland, included 31 LAGs implementing some form of youth LEADER action which typically involved small grant support (on average €500 each, with each LAG awarding an average of 13 grants). Projects typically initiated and implemented by young people (aged 16-25) involved the purchase of equipment or organising events. Fewer LAGs have formal youth committees or advisory bodies. Guidance has been issued to LAGs to inform their work with young people (The ABC of Youth LEADER).

Community-led Local Development Strategies (bottom-up)

The bottom-up approach to both the formulation and implementation of LAG strategies is considered the most fundamental LEADER principle by actors and stakeholders in Finland. It is also emphasised in the selection criteria, which require a description of the preparation process and a network analysis at the strategy application stage.

For the selection process, the Ministry of Agriculture and Forestry together with a cross-sectoral Selection Committee, provides guidance for the preparation of Local Development Strategies. The selection of LAGs and their strategies for the 2021–2027 programming period followed a two-phase model:

Phase 1: Applicants defined their proposed operational areas, conducted a situational and network analysis, and described the participatory process used in developing the strategy. Ministry of Agriculture and Forestry provided feedback to each applicant with the support of an external evaluation team commissioned through a tender.

Phase 2: Applicants submitted completed strategies, which were then reviewed by both the external evaluation team and the Selection Committee. At this stage, the quality of the strategies was assessed according to criteria defined by the Ministry of Agriculture and Forestry.

Role of the external evaluator: The external evaluator assisted throughout the process. The official scoring communicated to applicants came from the Selection Committee, which also proposed the funding framework for each LAG. Formal decisions were made and communicated by the Ministry of Agriculture and Forestry.

Innovative features

Innovative features - understood in the local context - are both expected and assessed during the ex-ante evaluation of LAG Local Development Strategies. There are no formal guidelines for assessing innovativeness in strategies and innovation is generally acknowledged to relate not only to what is done and the products/services developed, but also to how activities are carried out.

LAGs also apply innovativeness as one of the criteria in their project selection and scoring processes, although assessment of the innovativeness of projects ultimately depends on each LAG’s qualitative judgement.

As innovation is often difficult to quantify, LAGs are at minimum required to provide anecdotal evidence of innovative elements in their annual reports. “Project stories” shared on LAG websites and social media channels help illustrate innovative and inspiring local activities.

Networking

Demonstrating the role and evolution of networking in LAG strategies and activities is considered essential in the Finnish implementation of LEADER.

A network analysis was required as part of the Stage 1 application process for becoming a LEADER group for the period 2021-2027. The Rural Network Unit provided training on how to carry out network analyses prior to the launch of the current programming period. The Unit also actively promotes dynamic networking among LAGs and other LEADER stakeholders.

The independent network and advocacy work of the Finnish LEADER groups is coordinated through the LEADER Division of the Finnish Village Movement Association (Suomen Kylät ry, which was described earlier).

Co-operation with other territorial actors (transnational co-operation)

Both inter-regional and transnational cooperation are actively encouraged in Finland to foster learning, inspiration, and also tangible results. Arrangements to support LAGs with co-operation may vary from year to year. Thematic events and experience exchange can be held live or virtually. The National Rural Network can provide guidance for (transnational) partner searches and occasionally facilitate matchmaking, though this is not a regular service due to limited staff. The Network also offers a lump-sum “service package” if someone other than a staff member or civil servant represents the Finnish NRN at an international rural development event, or if the applicant organises another justified cooperation event.

During the 2014–2020 period, Finnish LAGs implemented a total of 70 transnational projects, the highest number of all EU Member States. These projects involved approximately €9.6 million in public funding. A dedicated evaluation study of transnational cooperation (TNC) projects was commissioned in 2016 (Pylkkänen et al. 2015). TNC projects are primarily non-profit development initiatives carried out by associations and NGOs, with experience exchange as their main motivation. Inter-regional projects often have a more concrete focus and are common in area-based development, for example, hiking trails that cross LAG boundaries.

Currently, there are 31 inter-regional and 25 transnational LEADER projects underway.

Multi-sectoral

The multi-sectoral nature of the LEADER approach is strongly emphasised in Finnish LEADER communication, even though it is not explicitly highlighted as a distinct feature in the EU framework regulation.

On average, Finnish LEADER groups make between 50 and 100 funding decisions annually. This multi-sectoral character is reflected in the wide variety of initiatives supported by the LAGs.

Publicly available project summaries in the Rural Network’s project register (Maaseutuverkosto 2025a) provide a source of inspiration and a broad overview of the diversity of LEADER and other rural development projects across the country.

7.2 Financial and Human Resources for the LEADER Approach

The LEADER approach in Finland’s CAP Strategic Plan receives 6% of the total European Agricultural Fund for Rural Development (EAFRD) allocation. Around €230 million in public funding is available over five years for 2023–2027. This amount includes the municipal co-financing which must be (at least) 20% of each LAG’s public budget. In addition to public funding (i.e., the EU, the government via the Ministry of Agriculture and Forestry, and the municipalities’ contribution to the LAGs in their area), local projects typically mobilise private funding. Some projects, such as training, can be fully publicly funded, while business investments usually require private contributions. Overall, private funding is estimated at 35% at the programme level (over 2023-2027), but this varies between LAGs. By the end of 2022, actual private funding reached 33% at the programme level.

The public funding available to individual Local Action Groups (LAGs) ranges from approximately €2.6 million to €8.3 million over the 2023-27 period. The grant rate at the project level varies depending on the type of project (for example training, co-operation, not-for profit investment, business start-up, business development, etc.), with LAGs permitted to offer lower grant rates if they wish, especially when funding is limited (though grant rates tend not to differ significantly between LAGs) (see VN 2023/617 and 2023/617, which are the relevant Government Regulations on Supporting Rural Project Activities and on Rural Business Support in the 2023-2027 programming period).

In terms of human resources, each LAG directly employs between two and four rural professionals. The minimum core actors are the LAG manager and a staff member focusing on project advisory and communications tasks. LAG board members also represent valuable social capital, helping to disseminate information and bridge connections across local communities and sectors.

7.3 Action, advice and funding

A widely used slogan in Finnish LEADER communication is: “LEADER means action, advice, and funding - for the good of your community” (see for example www.leadersuomi.fi).

In the CAP Strategic Plan for Finland (2023-27), LEADER is defined as a separate cooperation intervention, consisting of three sub-measures:

1. Actions implementing the local development strategy (including cooperation projects, training and information projects, non-profit investments, business start-up support, business development support, and business investment support).

2. Operating support (“running costs as a LAG”).

3. Preparatory support (Preparatory support for the development of future local development strategies for the next programming period).

Actions implementing the local development strategy are carried out mainly at the local level, but cooperation projects as well as training and information dissemination projects can also be regional, interregional, or international in scope. The LEADER groups and the respective ELY Centre agree on the division of responsibilities regarding development projects and business support within their region in a cooperation document. This is important, as evaluations of the LEADER approach have shown business support as the most contentious topic between the LAGs and the governmental actors.

There were several arguments for differentiating funding instruments. LAGs have long requested tools that differ from those used by mainstream funders, such as the ELY Centres. The rationale is that, because LEADER is expected to be experimental and innovation-oriented, its support tools should also allow for more experimentation and involve lighter administrative procedures. In particular, LAGs sought check-type support and lump sum grants (e.g. Rannanpää et al. 2020).

For the 2023–2027 programming period, several changes were introduced to the business support tools, meeting the expectations of most LAGs (and also of the ELY Centres). From the clients’ perspective, it had previously been confusing that there was virtually no difference between the two types of funders. At the same time, some ELY Centre staff criticised LAGs for having less experience in providing business support, particularly for larger or more specialised enterprises. Under the new regulation, LAG support is limited to micro-enterprises employing no more than five people, as well as to farms testing new activities.

Non-profit projects are typically initiated by local associations for sports, hunting, youth work, or village development, often in partnership with one another. Municipalities are eligible to apply for LEADER grants, provided that the project funding does not seek to replace their statutory responsibilities or regular budgetary expenditure.

Operating support is meant for functioning as a LEADER group in its entirety, including activation, advising, communication, and LAG administrative costs. A core staff of two people are typically covered by the operating support. Operating support is calculated in proportion to the size of the funding envelope for the implementation of the local development strategy, commonly referred to as the project funding envelope. A maximum of 25% of the total public funding for the local strategy is applied. As the envelope size increases, the relative share decreases (Maaseutufi 2023)

7.4 LEADER Action Beyond Funding

In addition to funding external projects according to the strategy, many LAGs also implement their own project initiatives aligned with local development strategies, often hiring additional staff for this purpose. Some LAGs also seek additional funding from other sources like the European Social Fund (ESF) or the European Regional Development Fund (ERDF), expanding their impact beyond the core LEADER budget. LAG staff often have strong local knowledge and are engaged in broader regional networks and development efforts, though limited resources can constrain smaller groups. Board members and volunteers also promote LEADER locally, with some LAGs organising annual site visits to funded projects to enhance learning and visibility.

7.5 Snapshots of LEADER outputs over the period 2014-2020

Box 3. Some Key Figures on the LEADER Approach (2014–2022, all Local Action Groups combined)

• 6,253 development and cooperation projects
• 4,072 business support decisions
• €332 million in public funding granted
• 3 million hours of voluntary work promoting community cohesion
• €190 million invested in sports facilities, recreational routes, community spaces, and other initiatives improving local attractiveness and quality of life

Source: Leadersuomi, 2025.

On the more qualitative side of outputs, the latest overall evaluation of the LEADER approach (Rannanpää et al., 2020) concluded that its greatest added value lies in the strengthening of social capital and in the generation and utilisation of new local knowledge. Compared to other development approaches, LEADER stands out for its stronger bottom-up orientation and greater flexibility. It is widely regarded as legitimate by both local actors and their stakeholders. The mediating role of LAGs between government administration and local actors – and particularly volunteers - is critical (Pylkkänen et al.,2024).

7.6 Funding period 2023-2027 - simpler tools for micro-business support

The 2020 evaluation recommended introducing LEADER-specific business funding instruments that would be easier to administer for both applicants and LAGs themselves, and better suited to experimental and innovative initiatives (Rannanpää et al 2020). For the 2023–2027 programming period, business support available through LEADER groups was significantly revised and clearly distinguished from the instruments used by the ELY Centres. Currently, LEADER business funding is primarily based on standardised lump sums for business trials, start-ups, farm pilots and business development measures. While LAGs must follow the same grant conditions and state aid ceilings as the ELY Centres when awarding business investment grants, LAGs are focused on supporting smaller businesses (with less than 5 employees).