We show that the observed ferromagnetic behavior of ZnO lightly doped with Mn coincides with the presence of MnO nanoparticles, whereas cluster-free Mn doped ZnO behaves paramagnetically. This conclusion is reached by a study of the structural and magnetic properties of powdered samples of (Mn-x, Zn1-x) O with x <= 0.033 using polarized neutron scattering. Two types of samples were synthesized via, respectively, a solid state method and the decomposition of hydrozincite. Further characterization has been performed using standard X-ray diffraction and magnetization measurements. The results show evidence for the formation of MnO nanoparticles in the highest doped samples for both synthesis methods, with a ferromagnetic behavior attributed to uncompensated Mn2+ in the MnO nanoparticles. The lower Mn-doped samples showed no evidence for structural segregation or magnetic correlations and showed only a paramagnetic behaviour. Published by AIP Publishing.