The role of local institutions has been significantly recognized in the rural development that enhances the rural livelihoods. Community-based organizations (CBOs) are local groups of people legitimized by customary and/or formal institutions acting in the community for the betterment of its members. The evaluation of these groups in order to support the rural livelihood demands wider dimension. This study tried to evaluate the potential impacts of CBOs on the livelihood of people in rural areas of Nepal considering several variables. The methodology undertaken for this study was mainly group appraisal considering those variables that can influence the group performance. In total, 19 groups were considered and categorized into three main groups, such as, farmers' multipurpose groups (FMGs), credit and saving groups (CSGs) and forest users' groups (FUGs) for the purpose of evaluation. This study indicates that, at village level, local people are facing many problems in agriculture production, credit facilities and are more dependent on the use of forest resources for their livelihood. The service delivery from governmental and non-governmental organizations is very weak. This indicates that institutional approach to help each other and coordinate with governmental and non-governmental organizations is necessary to support their livelihoods. In the group evaluation, it is found that participation of the local people in different activities is excellent. The groups have developed some kinds of linkages with governmental and non-governmental organizations in the rural region. The group members are able to improve their overall social welfare through participation in different activities of the groups. The share of inputs and information in farming activities, efficient saving and credit services, and conservation and use of forest in sustainable way are main outcomes of group approach that pertain to enhancement of their livelihood. The women's participation is also found high in the group activities. However, the tr