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This article deals with the growing importance of Non-Governmental Organisations in the South as partners for international development cooperation. It focuses on the innovation potential of NGOs in tackling poverty and in promoting social, economic, and political development in cooperation with donor agencies. It is argued that NGOs face critical challenges when opting for increased professionalism and expansion in size. Many NGOs run the risk of loosing their valuable potentials and advantages in the name of professionalism by transforming themselves into government-like bureaucracies or profit oriented enterprises. Drawing from significant experience in developing countries and with donor agencies, the author offers an ambitious theoretical analysis of NGOs in the south which goes beyond typical approaches of looking at the performance of individuals or merely specific types of NGOs.