The move towards decentralisation of resource control and management promises more efficient, equitable and sustainable resource use. Debate centres on what type of institutional arrangement in a given context is most appropriate and will lead to the fulfilment of the above ideal. Aspects of these arrangements include property rights structures as well as organisational structures. Following two decades of experience in India and Nepal with development of local forest management organisations, this paper analyses the factors that contribute to the effectiveness of local organisations as resource managers. It outlines gaps in our knowledge and concludes with a discussion of the implications for policy and practice.