The goal of this case study is to review the legal environment or basis of arts and cultural organizations in the framework of reforms, innovation and privatization in the social sector and examine the consistency of the legal environment with other legislation. The secondary goal of the study is to explore the implementation process of reforms, innovation and privatization in rural arts and cultural areas along with outcomes on practical examples of certain aimags and areas. This survey has been carried out in particular phases with a series of goals through reviewing or the exploratory method of a case study. The specific goals of this survey are to examine the legal environment for reforms, renovation and privatization of arts and cultural organizations, to reveal the underlying problems and discrepancies thus to approve them through the current state of rural cultural organizations and eventually to raise some issues based on facts and viewpoints of interest groups.