The proposed research attempts to analyze the extent to which Islamic aid associations from the West and the Middle East define and address domestic welfare issues, establish partnership with local institutions, as well as place their missions in the Indonesia’s social, cultural and political landscape. This research will also take a look further at the socio-political implication of the flow of international aid agencies for domestic Islamic charities as well as for the communities in disaster affected areas. This paper focuses on four Muslim NGOs, which are two UK-based Muslim NGOs (The Muslim Aid [MA] and Islamic Relief [IR]), as well as two Middle East-based Muslim NGOs (Qatar Charity [QC] and Asian Muslim Charity Foundation [AMCF]). While acting as philanthropic organizations in their country of origin, these four Muslim NGOs have emerged in the Indonesia soon after 2004 Tsunami disaster as well as in the aftermath of the 2006 Yogya earthquake. In particular, the objective of this research is to discover the impact of the presence of international Islamic aid agencies in Indonesia on the welfare of the communities, in general, as well as on the institutional capacity of grassroots institutions.