The development of communities and territories requires significant investment. At their expense, communities can restore existing or build new infrastructure, develop businesses, and launch joint development projects. All this is done to improve the living conditions and well-being of the population in communities. As a rule, there are not enough own funds to solve all tasks: community resources are limited and are largely used to meet priority needs. Rural and village communities, almost always financed on a residual basis, are practically unable to provide not only extended, but even simple reproduction of their territories. Therefore, larger projects are implemented using financial or material and technical resources provided from the state budget and/or through international technical assistance projects. This resource is mainly received on a non-refundable basis. The main requirement is for communities to get a sustainable long-term effect from investment. It is also a confirmation of the ability of territorial entities to independently maintain restored or created infrastructure or projects that have been put into operation. In order for these funds to be received by the most worthy and prepared entities, they are distributed through competitive selection mechanisms. Any communities submit project applications for the competition. The most important thing is that the applications meet the requirements of the competition and contain all the information properly submitted. The EU sectoral support competition is one of the largest, both in terms of coverage of Ukrainian communities, and in terms of development areas that can be funded. The results of the competition allow assessing which development problems seem most urgent in rural areas, and whether rural communities have an understanding of the requirements of project approaches. Conclusions and generalisations can serve as a marker for assessing the competitiveness of rural and village communities in the struggle for project resources. In addition – in terms of forming further policies for the development of rural areas and their institutional support. The purpose of the study – assess the ability of territorial communities (with an emphasis on rural and village communities) to prepare high-quality development projects in accordance with European approaches, and provide proposals for improving this ability. To assess the ability of territorial communities to prepare high-quality development projects, statistical and comparative analysis, systematisation and generalisation of information were carried out. The following methods were applied: synthesis and formalisation, graphical and tabular techniques. A study of the activity of communities (with an emphasis on rural and village ones) in terms of preparing development projects was carried out. Their readiness to participate in competitions is analysed. Based on the submitted project applications, a summary of the key priorities for the development of rural and village communities is made. A number of generalisations have been formed regarding the level of project capacity of territorial communities (primarily rural and village communities). Proposals have been developed to improve the ability of communities to attract resources through competitions of this level and their further effective use. Separately, proposals for the introduction of a “project counselling” system within agricultural advisory services and/or regional development agencies (RDA) are provided. The results of the assessment of the ability of rural and village communities to prepare high-quality development projects, the proposed recommendations for their improvement, can be used by central and local authorities, territorial communities, organisations, international technical assistance projects, whose activities are aimed at the development of communities and territories in the implementation of rural development policies both at the national and local levels