Community based method is becoming an alternative means of targeting potential participants in social protection and poverty reduction programs. This follows acknowledgement that most developing countries have no adequate capacity both technically and financially for them to employ other rigorous methods like means testing. However recent evaluations of different programs and projects have indicated targeting errors, causing critics to raise doubts as to whether local community people have relevant information to enable them conduct successful targeting. Using the Malawi Social Cash Transfer Program, this paper examines whether local community people have relevant knowledge about household poverty which can help them conduct successful targeting with minimal errors. The findings challenge the skepticism that local people cannot successfully conduct targeting when properly guided. They have knowledge about poverty as well as its categories and causes, which are similar to those being used by development practitioners, though theirs is up-to-date. The paper argues that community-based methods have great potential of reaching out to the most needy people or households at affordable cost since there is cost sharing with community people, most of whom volunteer their time. The study further confirms that the method works better when the following factors are considered; institutional set up and capacity, financial flow and sustainability, and technical and political support to implementing agencies and agents.