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Small and medium forest enterprises (SMFEs) provide an opportunity to reduce poverty and sustain forests. But they face a number of critical bottlenecks to their development. Working together in associations can overcome such bottlenecks where few other support structures exist. There are literally thousands of forest-linked small and medium enterprise associations in developing countries. Some fail, but many succeed. Successful associations are the means to achieve three important development ‘ends’:• Reducing transaction costs• Adapting strategically to new opportunities• Lobbying for more supportive policiesThis paper draws out some lessons on how and why associations work. The research found that lasting associations generally have a strong degree of autonomy. They usually have leaders with a track-record of social commitment. Most have gradually evolving sets of procedures that institutionalise the progress made by charismatic founders. Their focus is usually restricted to a few long-term issues. Equity is highest where there is greatest investment in democracy. Equitable associations tend to pay attention to transparency over costs and benefits. Most also have in place sanctions for free riders or those who break their rules, and clear procedures for resolving conflicts.