Research in Canada and Australia has shown that social capital is a necessary condition for sustainable community development as it enhances linking ties that increase access to resources outside the community. Social capital in and of itself, however, is not always sufficient to sustain and develop local community initiatives, as infusions of economic and human capital are often necessary; the larger ‘social safety net’ can play a critical role in local community development initiatives. More importantly, government policy alignment may be critical to establish a stable environment within which organizations can sustain and increase the scale of their operations. Governments have a critical leadership role to play by re-aligning policies and incentives to complement the existing social capital network formation by strategically targeting their interventions at pivotal points in the evolution of local organizations to optimize their access to outside economic and human resources. The role of government is explored in a case study outlining the actions of a local community initiative in a marginalized neighbourhood of Vancouver, Canada.