The UK Government's National Strategy for Neighbourhood Renewal (2001) identified ways in which the voluntary and community sectors are to be supported in developing their `capacity'. We can begin to reflect on current practice and experience and identify early trends. This article will draw on a completed evaluation of the development of a community centre funded via the European Regional Development Fund (ERDF). It had as its remit that of increasing local capacity in the community and supporting new employment opportunities. The initiative established a local partnership that had a significant number of local residents and tenants on the management board. The article will suggest that while both the model developed and the expertise of those involved have a number of positive features there are important policy and practice issues still to be resolved. In particular, we need to be clear about both the intended (and unstated) assumptions surrounding `capacity building' and the potential limits to local or neighbourhood partnerships, and the real conflicts of interests they contain. Specifically, we need to think more clearly about securing relative independence for such initiatives, and what this may mean for all parties involved.