Non-governmental organizations (NGOs) are the modus operandi in the development arena at this juncture. Many, including feminists, place much faith in these actors for creating a progressive space for social, political, and economic activities to be undertaken. This article employs fieldwork evidence from eastern Sri Lanka, carried out in 1998-1999 and early 2004, to challenge this simplistic reading. The primary social group that was studied during the fieldwork period was female-headed households. This article argues that there are different types of NGO working in multiple ways in the region, and it is important to distinguish between these differences. NGOs that primarily execute development-oriented projects without considering the ethno-nationalist and gender politics are culpable of the violence of development. It is only when NGOs are in local communities for the long haul that they are able to develop a commitment to reassess and evaluate the social transformative potential of their activities. Using a feminist political economy perspective this article argues that it is important and necessary that NGOs confront social, political, and economic structures, including ethnic identity politics, if their activities are to lead to transformative feminist politics. In other words, NGOs would have to do more than pay lip service to gender mainstreaming, as is more often the case. These actors need to recognize and understand the potency of ethno-nationalist politics, social structures, social exclusion, and social injustice in order to create social spaces that are enabling of women's agency in the local communities within which they work and operate.