This article explores the local governance of poverty alleviation in a marginalised Hungarian rural community, with over 50 per cent Roma inhabitants, most of whom were either unemployed or participated in public work projects. Kisbalog is among those marginalised rural communities which are characterised by increasing social polarisation and ethnic cleavages as a result of selective outmigration and a municipal leadership which negotiates access to public work along racialised notions of deservingness. Hungary follows the EU concept of public private partnerships for local governance. This article unravels the room for manoeuvre for NGOs working for poverty alleviation in the context of the racialised narratives of a paternalistic local welfare state. Utilising Young's notions of social justice it explores the complicit nature of recognitional, associative and distributional justice in order to understand the interplay in partnerships between public and private agencies. From among three types of strategies, coercive, isolated and deliberative, the last one has the potential to bring about transformative changes.