Funky Dragon conducted a survey to which 12,000 young people responded complaining of meetings crammed into break times - a breach of Assembly government guidelines - and controlling staff.
The Assembly government this week responded swiftly to the criticism, vowing to follow Funky Dragon's recommendations and make school bodies "truly effective".
Wales was the first country in the UK to make school councils compulsory for all primary and secondary schools - though not infants and nurseries - in September 2006. They are meant to meet at least twice a term.
The philosophy behind them was to give young people a voice on decisions made at management level, including healthy eating and school uniform rules. School council members, who are elected by other pupils, have also been known to sit in on teacher candidate interviews and meetings of the governing body.
But Funky Dragon's report concludes that many councils make only "superficial" decisions and that other pupils are rarely included. "We can only conclude that, at best, teaching staff are unaware of the government's guidance or, at worst, choosing to ignore it," says its annual report.
Many pupils also complained that school management stopped them doing things they want to do. But, in one school's defence, its headteacher cited pupils clamouring for a drinks machine, when these are forbidden under Assembly government rules.
Funky Dragon called for pupils and management to agree common ground on negotiable issues.
"It will take time for trust to develop," the report says. "If the initiative is to succeed, it needs to be given far more thought."
Funky Dragon wants councils to be given "the support and resources they need to function" and training for teachers so they can "look at their responsibilities".
It said that personal and social education lessons should be used to promote the councils, and that they should be reviewed by Estyn, the inspection body, which should look in particular at how meetings are timed and elections run.
Rhys Williams, NUT Cymru spokesman, welcomed the comments. "It isn't enough just to establish something," he said. "It needs constant monitoring. I don't think the education establishment should be defensive about it."
But rather than teacher training, which could be seen as punitive, Mr Williams called for a sharing of best practice. "This could be done through local authorities. They should take more interest," he said.
Leader, page 28.