Despite costly government interventions, the trends in rural poverty and agricultural productivity have not significantly improved over the past decades. Poverty has continued to be a predominantly rural phenomenon. Expansion of rural non-farm economy is integral to connect the rural poor to economic growth. It is here that the linkages among agricultural productivity, aggregate economic growth, and the connection of the poor to that growth, become crucial. Rural non-farm economy (RNFE) already accounts for substantial share of full-time employment and total rural income across developing countries. While its economic importance becomes evident, the RNFE remains in a state of “institutional vacuum.” Jurisdiction of the sector does not fall under the domain of Agricultural Ministries with their mandate on agricultural production or that of Industry Ministries, which focuses on large-scale, formal-sector firms. While no single government authority claims authority over RNFE, it is influenced by many actors, including the local governments, national government and the private sector. The result is a highly fragmented institutional network of public and private support for rural non-farm activities. The delivery of rural development services in the country suffers from considerable institutional fragmentation and functional overlaps in various intervention areas. The three principal rural development agencies are divided into a multitude of attached agencies and bureaus. Although their functions and mandates have been clearly set by law, there are functional overlaps in a variety of areas within and across these agencies. Since 1999, the government has pursued a convergence strategy through the National Convergence Initiative (NCI) as a mechanism for institutional coordination to achieve sustainable rural development. However, the NCI still struggles to meet the expectations. Although designed to respond to sector-wide goals, the NCI finds itself still in the process of defining its role and functions. There is growing evidence across developing countries of moving towards alternative institutional approaches that recognize the multiple paths out of rural poverty. But the general challenge has been translating these statements of principles to practical policy measures to the sphere of productive activities both at the national and local levels. A number of institutional models have been presented in the paper to consider. Given the diversity of rural activities, the centralized or ‘one-size-fits-all’ approach will not allow efficient allocation of resources across the rural landscape. In the Philippine setting, the government can first try policy-proofing then work its way toward inter-ministerial coordination. Ideally, the focal agency of this coordinating body should have a multi-sector orientation with strong links to the academe and research institutions. This will provide strong technical support and minimize sector biases.