Community forest user groups (CFUGs) in Nepal generate income over US$ 10 million annually through community forestry. The income generated is invested in different development activities, including pro-poor programmes (PPP). This paper seeks to understand to what extent CFUG funds are being invested in PPP, what factors determine whether investment in PPP is made, and whether the amount of CFUG income matters for making an investment in PPP. The paper relies on primary data from 100 CFUGs distributed in three different midhill districts of Nepal. A set of questionnaires was developed and administered to a small group of 100 CFUGs. The study findings show that PPP is the second major expenditure of the CFUG funds examined. It suggests that investment in PPP tends to depend on the amount of CFUG income. In addition to CFUG income, the chairperson's age, the secretary's exposure, and the number of dalit households are likely to influence whether investment of CFUG funds in PPP is made: an older chairperson increases the likelihood that investment of CFUG funds will be made in PPP, whereas exposure of the secretary to training and a higher number of dalit households are likely to lead to less or no investment in PPP. The paper concludes that higher income leads to a proportionally higher investment in PPP and suggests that it is necessary to increase CFUG income to increase investment in PPP. There is also a need to consider that increasing CFUG income may lead to overharvesting of forest resources.
