Community Managed Projects (CMP) have become an important form of development assistance in developing countries. However, a look at their conceptual foundations and evidence on their effectiveness shows that such projects have not been particularly effective in targeting the poor. The argument for the CMP approach is mainly to foster ownership, sustainability and accountability in projects. We employed quantitative and qualitative methods to assess the challenges of community participation in development projects. Findings revealed that CMPs face numerous challenges at community and organizational levels and the promises of good outcomes of project initiatives are always hard to come by. The study makes several recommendations to organizations that support CMPs to promote genuine and effective participation of communities in all stages of the project cycle.