The domain "Local Governance and Civil Society" is about the ways and means by which people and communities organize themselves and are politically represented. Political and administrative self-organisation is mostly territorial, within a village or a town; but people also join together for a particular economic interest or social purpose. To address issues of local importance, local participation and ownership are required. Equitable, transparent, accountable, effective and efficient decision-making needs good local governance and a strong involvement of the civil society. Local governance should be embedded in a system of decentralization and follow the principle of subsidiarity. To be effective and sustainable, state-led programmes of devolution and local fiscality need to be matched by a bottom-up movement of emancipation and empowerment.

Intercooperation's role in local governance programmes is to promote the development of municipalities, villages and other local bodies, with emphasis on accountability, participation and effectiveness. Intercooperation wants to ensure that the poor, women and marginal groups are well represented, that their voices are heard and their rights secured. Beyond the strengthening of municipal management and services, Intercooperation is concerned with local economic development. Local governance includes also the management of common property resources, for example in the case of community forestry and pasture lands.