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This research aims to explore those challenges which restrict the performance of NGOs in provision of services to the community. These challenges are primarily socio-political and institutional nature. This study is carried out in two different villages Hangrai and Talhatta of tehsil Balakot, District Mansehra KPK, Pakistan. The political pressure, corruption, lack of co-operation and weak hierarchical management system in governmental sector are those factors that restrict the performance of NGOs. This study also highlights the compatibility of NGOs with the guidelines provided by ERRA and PERRA government of Pakistan