Community forests in Nepal are organized by government foresters, who enroll local forest resource users into Community Forest User Groups (CFUG). These identified users become the ‘community’ in community forestry. Because these users are defined by their relationship to forest resources, they appear to escape some of the problems associated with myths about community. However, government officials and foreign donors frequently ‘black-box’ CFUG communities, ascribing them a false homogeneity. In fact, the government’s user group formation process reflects and exacerbates existing divisions within communities, leading to user group domination by local elites. The resulting power disparities have apparently mixed effects, limiting the potential for poverty alleviation but allowing, perhaps even enabling, forest conservation.