Community forestry in Nepal attempts to create democratic inclusive forums of decentralized self-governance. Local populations, including women and lower castes are invited to participate and to voice their opinion about the management of their forests and natural resources. This article is the result of a study in three communities in Nepal where the authors explore how individuals regard their ability to exercise power. In this context, power was defined as, "the ability to create rules, make decisions, enforce compliance and adjudicate disputes." This study identified the constraints preventing some groups from exercising power as lack of transparency, vulnerability, and sense of inferiority. Community forestry groups operate within larger complex informal institutions where lower caste and women are deprived of opportunities to develop the confidence to exercise power. These two groups often are linked by lack of literacy, lack of private resources, and lack of access to information, which also act as constraints to full participation. The majority members of the forestry user groups (FUGs) belong to higher castes only. In one region of the study, 19 lower caste households expressed being treated as inferior by the FUG who refused to grant them permission to participate. The FUG confirmed this perception justifying their actions on the hierarchical caste system. They also feel vulnerable due to the rejection of access to community forestry and because they lack private resources to meet their needs. Women also expressed their inability to participate; their vulnerability lies on the lack of access to private resources, and their sense of inferiority arising from village perceptions that women are "backward". The FUG has also been accused of withholding information regarding the use of money of membership fees and from the sale of forestry products. This factor creates trust issues between the FUG committee and the populations accusing them of lack of transparency. The study concludes by stating that opportunities to exercise power arise from both formal and informal institutions, and empowerment can only occur through the skills and confidence necessary to exercise power.