We investigate signatures of electronic correlations in the narrow-gap semiconductor FeGa$_3$ by means of electrical resistivity and thermodynamic measurements performed on single crystals of FeGa$_3$, Fe$_{1-x}$Mn$_x$Ga$_3$ and FeGa$_{3-y}$Zn$_y$, complemented by a study of the 4$d$ analog material RuGa$_3$. We find that the inclusion of sizable amounts of Mn and Zn dopants into FeGa$_3$ does not induce an insulator-to-metal transition. Our study indicates that both substitution of Zn onto the Ga site and replacement of Fe by Mn introduces states into the semiconducting gap that remain localized even at highest doping levels. Most importantly, using neutron powder diffraction measurements, we establish that FeGa$_3$ orders magnetically above room temperature in a complex structure, which is almost unaffected by the doping with Mn and Zn. Using realistic many-body calculations within the framework of dynamical mean field theory (DMFT), we argue that while the iron atoms in FeGa$_3$ are dominantly in an $S=1$ state, there are strong charge and spin fluctuations on short time scales, which are independent of temperature. Further, the low magnitude of local contributions to the spin susceptibility advocates an itinerant mechanism for the spin response in FeGa$_3$. Our joint experimental and theoretical investigations classify FeGa$_3$ as a correlated band insulator with only small dynamical correlation effects, in which non--local exchange interactions are responsible for the spin gap of 0.4 eV and the antiferromagnetic order. We show that hole doping of FeGa$_3$ leads, within DMFT, to a notable strengthening of many--body renormalizations.
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