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Prior work suggests that government funding can encourage non-governmental organizations (NGOs) to engage in political advocacy and public policy. We challenge this finding and examine two theoretical explanations for the dampening effect of government funding on NGO lobbying. First, donors are known to discipline NGO activity via an implicit or explicit threat to withdraw funding should the organization become too radical or political. Second, NGOs with more radical political agendas are less willing to seek or accept government funding for fear this will limit or delegitimize their activities. Using data from the European Union’s Transparency Register, we find that the share of government funding in NGO budgets is negatively associated with lobbying expenditure. This effect is statistically significant and substantial, which provides a reason for concern about NGO resource dependence. Even when governments are motivated by honorable intentions, their financial assistance has the (unintended) effect of dampening NGOs’ political activity. [ABSTRACT FROM PUBLISHER]