Over 85% of Uganda's 34 million people depend on rural water supply systems and the current water and environment sector performance report (2017) reports an 84% functionality of rural water sources such as boreholes and shallow wells with a hand pump. Ensuring the continued operation of water points, and in keeping with participatory theory, the water user's committees (WUCs) should also be a vehicle for empowering communities while bringing about greater equity of use. However, WUC members do not acquire the knowledge and skills they need by default but require different types of training. This study sought to evaluate community participation and capacity development in WUCs in relation to community-managed water supply systems. A shared dialogue workshop (SDW), as well as 642 randomly selected households across 17 villages in two Parishes in Lwengo district, southern Uganda were considered. Results indicated that 41.7% of surveyed households used an unprotected source while up to 30% had a member in a WUC. Fifty-two percent of households had never made any financial contributions to a WUC, while 34.6% did so on an ad hoc basis. This paper examines the relationship between participation, mobilization, and financial contributions. The chi-square test indicated mobilization has no impact on household financial contributions to a WUC. However, the majority of even those households that were mobilized made a payment only occasionally, and specifically when the source broke down. Additionally, the test result reveals that there is no difference between better off and relatively poor households in their contributions to a WUC, an indication that other factors influence such decisions. Training activities, especially on the operation and maintenance of water points and to undertake minor repairs, were mostly provided by non-governmental organizations (NGOs)/project staff. Abandoned boreholes, lack of rehabilitation activities, and loss of enthusiasm are all indications that the technical, financial, and institutional performance of community-managed water supply systems needs improvement.