Community organizations in developing countries often suffer from selfserving elites. This study examines whether the responsiveness and accountability of local leaders can be strengthened through the introduction of more inclusive and participatory leader selection rules. To address identification problems, I take advantage of natural conditions that resulted in exogenous variation in the rules for selecting leaders of farmer associations in Uganda. I find that compared to leaders appointed by the community elites, directly elected leaders are significantly more responsive to group members, leading to greater cooperative behavior. Analyzing possible mechanisms, I find that community organizations using appointments are less likely to develop monitoring institutions that are vital for constraining the behavior of local elites. Unique social network data provides evidence that close friendship ties between appointed and appointers substitute for formal monitoring institutions, leading to loss of confidence by community members and, subsequently, to a decline in public goods contributions.