Education systems in developing countries are often centrally managed in a top-down structure. In environments where schools have different needs and where localized information plays an important role, empowerment of the local community may be attractive; however, gains from local information may be offset by low level of administrative capacity. This research evaluates the effectiveness of a comprehensive school-based management and capacity building program called Whole School Development (WSD). The WSD program provided a grant and a comprehensive school management training program to principals, teachers, and representatives of the community. In order to parse out the effect of the grant, a second intervention consisted of the grant only with no training (Grant-only). A third group, which also serves as control group, received neither. We randomly assigned 273 Gambian primary schools to each of the three groups. Three to four years into the program, we find that the WSD intervention led to a 21% reduction in student absenteeism and a 23% reduction in teacher absenteeism, with no impact on learning outcomes measured by a comprehensive test. We found that, the effect of the WSD program on learning outcomes is strongly mediated by the baseline local capacity measured by adult literacy. This result suggests that, in villages with high literacy, the WSD program may yield gains on students' learning outcomes. However, in villages where literacy is low, it could potentially have a negative effect. We present additional results to explore other de-\nterminants of the success of this type of interventions in low-income countries. We found no effect of the Grant-only intervention relative to the control on test score or on participation.