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The article examines how NGOs in rural Chile operated during the dictatorship and how their role changed after the return of democracy. An NGO (OPDECH) in Southern Chile is used as a case study. During the Pinochet regime, NGOs maintained a critical distance from the government by creating a niche for opposition researchers and activists. They provided a possibility of economic survival for professionals whilst working on alternative proposals to address the socio‐economic needs of the poor majority. External funding from international agencies provided much needed resources but created as well a culture of reliance and a clientelistic middle class of professionals. The NGO in Southern Chile became a nucleus of resistance and expertise on regional development by safekeeping democratic tradition and providing a range of solutions to local development problems. After the restoration of democratic government many professionals joined the government. NGOs exchanged their altruism for a more pragmatic, opportunistic and, in some cases, more efficient role as executors of government programmes. The case study in Southern Chile illustrates this trajectory well. After municipal elections a collaborative role with local government was sought by OPDECH that aimed to implement local initiatives as well as advise local and regional governments on environmental and developmental issues. Given the NGOs historical commitment to grassroots development, it remains to be seen what role they can play in supporting local government while forging a new role for themselves in a democratic context.