Social sustainability and sustainable communities are strongly linked to the concepts of social cohesion and social capital. Social capital arises through social networks, active citizenship, community volunteerism and taking part in social networks, which may be family, friends or associations. Through a high level of social capital, social cohesion can be fostered in communities. This is the aim of current urban policies, as cities nowadays struggle with high degrees of social segregation, fragmentation and polarisation. In an urban context these problems become visible through deprived neighborhoods, which are physically and socially isolated from the urban core. This phenomenon often goes hand in hand with ethnic segregation. These problems also emerge in Scandinavian cities, like the city of Malmö in southern Sweden. This paper will thus show what kind of policies are undertaken by the municipality to face social exclusion and to support active citizenship in the neighborhoods. This will be demonstrated with the aid of the case of the neighborhoods of Holma and Kroksbäck in the southern fringe of Malmö. In these neighborhoods, dominated by immigrants from the Middle East, former Yugoslavia and Albania, the level of trust is low and social capital is eroded. Ethnic associations thereby play an important role as the voice of local residents in collaboration with the municipality. Some examples of successfully facilitated actions by citizens’ participation in urban development by local residents- and barriers which occur will be analyzed.