The Badan Keswadayaan Masyarakat (BKM—Board for Community Self-reliance) are organisations established by the state as implementing agents of a community-driven development programme in Medan, Indonesia. Members are elected from the local population, but they continue to be supported by, and associated with the state. They are therefore 'straddler' organisations: organisations that span the state-civil society divide. This paper seeks to answer two questions. First, can BKMs' positioning between the state and civil society facilitate new forms of state/non-government organisations (NGO) collaboration, and if so, what is the nature of partnerships established through such collaborations? We find that straddle organisations offer a way for NGOs to collaborate with the state in the achievement of development objectives. Second what is the possibility and desirability of arrangements in which NGOs 'channel' funds to BKMs as a means to ensure the sustainability of the latter? We argue that while there is considerable promise in such arrangements, these should be designed around a model of 'working together' rather than merely 'channelling'.