This paper explores the interrelationship between two contemporary policy debates: one focused on the social determinants of health and the other on social (inclusion) policy within contemporary welfare regimes. In both debates, academics and policy makers alike are grappling with the balance between universal and targeted policy initiatives and the role of local 'delivery' organizations in promoting health and social equality. In this paper, we discuss these debates in the context of a recent social policy initiative in Australia: the Social Inclusion Agenda. We examine two proposed models of engagement between the government and the not-for-profit welfare sector for the delivery of social services. We conclude that the two models of engagement currently under consideration by the Australian government have substantially different outcomes for the health of disadvantaged communities and the creation of a more socially inclusive Australia.