A major problem for voluntary organisations service providers under contract has been their independence in regard to both the relatively narrow issue of the terms and conditions of service provision, and the broader issue about the part voluntary organisations might play in policy shaping and democratic renewal. I examine the way in which New Labour has developed its ‘partnership’ approach to the voluntary sector since 1998. I argue that better terms and conditions have been secured for voluntary organisations providing services, and that large and umbrella organisations now have more impact on the implementation of central government policy. However, the more equal partnership required for a policy-shaping role in the sense of agenda-setting is likely to remain elusive, while at the local level there are tensions between the idea of voluntary organisations as agents of ‘civil renewal’ and as service providers.