The aim of this comparative study was to explore how community work is being undertaken in marginalized urban settings in Germany and Sweden, in relation to changing contexts of respective welfare models. Semi-structured interviews were conducted in neighborhoods in Gävle, Sweden, and Paderborn, Germany, and were analyzed by abductive thematic discourse analysis, using Atlas.ti and MaxQData. The results showed that community work in the respective settings is affected by lack of sufficient resources to meet increasing levels of social exclusion, related to ongoing transformation processes of the welfare regimes, and there is a lack of collective empowerment perspectives for social change.