Organizations are the role-oriented institutions, and in economic sense they tend to contribute in generating benefit to their members by minimizing costs in input and output marketing. With this notion, development agencies have been strengthening local farmer-owned organizations in community-based rice seed production system in developing countries where private seed companies and government corporations have not been successful to supply diverse rice varieties in cheap price. In spite of the great potential of these farmers' organizations, the performance of these institutions is poorly understood. This paper measured the governance of these organizations and analyzes how organizational governance indicators (participation, business plan, incentive system and linkage) contribute on household level economic indicators (technical efficiency and proportion of rice seed sold by household in the market). Data for the study were collected from the three Tarai districts: Siraha, Chitwan and Kailali of Nepal. Four community-based rice seed producer organizations with 15 households from each of these organizations were chosen for the study. The economic indicators were estimated using household data whereas governance indicators through group discussion and documentary study. The impact of governance indicators on economic indicators was estimated by simple linear regression technique. Result shows that there is wide variability of economic and governance indicators across the organizations and there is positive impact of governance indicators on both economic indicators. However, the degree of impact of these indicators on proportion of rice seed sold is higher as compared to that of technical efficiency. Moreover, organizations with higher educated leaders have better governance indicators. It means facilitation of these organizations for selecting/developing higher educated leaders is important for enhancing organizational governance, which also contributes on economic benefits at household level.