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Some Latin American mayors and nongovernmental organizations (NGOs) collaborate to provide services while others work independently. It is widely believed that collaboration is beneficial and independence deleterious. Yet we know little about the conditions under which collaboration is most likely. I argue that decentralization policies and regulation of INGOs shape local governance structures, which in turn affect the likelihood of mayor-INGO collaboration. I test these ideas in highly INGO regulated and decentralized Bolivia and also in Peru, where INGOs are less regulated and decentralization policies are complicated. I further argue that subnational government capacity and political stability can also influence NGO-mayor cooperation. I draw on survey data of mayors and qualitative interviews of mayors, NGOs and community leaders in both countries. The survey data provides a comparative picture of NGO-mayoral collaboration; the qualitative data explores causal mechanisms. The work contributes to understanding capacity of local governments in providing basic goods and services in decentralized settings.