Abstract: The social governance capacity of local government is a subsystem of national governance capacity, and local financial arrangements are directly related to the rise and fall of the local government’s governance ability. Local financial supports fulfill the functions of local government and enhance the governance capacity. This paper is based on the 20 years’ data of Sichuan Province to explore the relationship between local finance and local government social governance capacity. In this essay, the social governance capacity of local government is divided into four dimensions: basic guarantee ability, macro-control ability, financial ability, and the ability of grassroots self-government. Besides, it uses time series regression analysis method and takes Eviews analysis software to measure the relationship between the local finance and the four dimensions of variables. Eventually, the study finds that there exists a stable and long-term relationship between local finance and local government social governance capacity. What’s more, it finds strengthening the social security ability depends on the increasing finance input. In addition, the capacity of local financial investment is the external performance of finance output. Also, there is a long-term and stable correlation between macro-control capability and local finance. Last but not at least, there is a weak relationship between the ability and the local autonomy of grass-roots finance correlation. Attaching importance to the construction of sub-abilities in local government governance ability and assisting the local government's social governance ability with the financial policy will contribute to the improvement of the local government's social governance capacity. The promotion of local government governance capability is a long process. It needs local government to explore and perfect it in practice so as to improve its governance capability and to provide better service for society.