A system of community forestry was developed during the late 70's to preserve the degraded hills of Nepal and to provide basic needs of forestry products to the rural people. The Community Forestry programme has received the highest priority within the forestry sector in Nepal and is regarded as one of the most successful development programmes in Nepal. However, recent studies are claiming that under Community Forestry; traditional users have lost their use rights and many of the poor have been marginalized - for example by way of fees and charges imposed to them. The issue of self-reliance to run the programme without external support is equally important. Currently only about 27 percent of potential community forest area has been handed over to the local communities, leaving a significant amount still to be handed over. Even so, the productive management of all of the forest areas already handed over is a great challenge requiring large amounts of current resources and a huge commitment from both the Government and the communities in the future. The paper discusses the issues of membership charges in community forests and the means to allocate the financial resources needed to run the programme. The creation of Forestry Development Funds in the districts could be a sustainable approach to running the Community Forestry programme in Nepal.