Civil society (CS) strengthening is central to peacebuilding policies for divided, post-war societies. However, it has been criticized for creating internationalized organizations without local backing, unable to represent citizens’ interests. Based on in-depth empirical research in Bosnia-Herzegovina, this article focuses on the legitimacy of CS organizations (CSOs). It explores why legitimacy for donors rarely accompanies legitimacy for local actors. We hypothesized that whilst donors avoid supporting mono-ethnic organizations, seen as problematic for peacebuilding, ‘ethnicness’ may provide local legitimacy. However, our analysis of CSOs’ ethnicness nuances research characterizing organizations as either inclusive or divisive. Moreover, local legitimacy is not based on ethnicness per se, but CSOs’ ability to skilfully interact with ethnically divided constituencies and political structures. In addition, we offer novel explanations why few organizations enjoy both donor and local legitimacy, including local mistrust of donors’ normative frameworks and perceived lack of results. However, we also show that a combination of local and donor legitimacy is possible, and explore this rare but interesting category of organizations.