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When the Rudd Labor Government took office following the November 2007 general election, replacing the Liberal/National Coalition government of John Howard, it set about immediately to re-frame the relationship between government and the not-for-profit sector (NFPS). Although the Howard government forged strong alliances with parts of the NFPS, its relationship with the sector has been characterised as ‘instrumentalist’ and governed by the logics of agency theory. Even before the election the Labor Party under Rudd committed itself to achieving a fundamentally new settlement with the NFPS whose key policy expression would take the form of a ‘compact’ that would set the terms of engagement between the federal government, through its departments and agencies, and the NFPS. Ostensibly founded on ‘social inclusion’ and ‘partnership’, the compact would mark a departure from the agency doctrines embedded in new public management (NPM). The Rudd Labor government’s pursuit of a compact followed the lead of national and sub-national governments overseas – most notably in the United Kingdom (1998) and Canada (2001) – whose landmark agreements set the benchmarks against which most other compacts are compared. On 17 March 2010, Prime Minister Kevin Rudd launched the National Compact. Although an important milestone, the policy journey did not end with this event. This paper explores the implementation challenges confronting government and the NFPS and considers the prospects for an Australian compact in the light of overseas experience.