"Partners"

Among the many areas in which we are trying to learn as much as we can as fast as we can is the nature of the relationship between Catalyst and the various organizations we support. The common term foundations seem to use is "Partner", which we have also adopted. The intent is that we develop an interactive relationship with these organizations and can offer them more than simply financial resources.
I've tried to reflect my developing understanding of this relationship before (here.
Through another very helpful post from Mark Petersen, whose blog has become essential reading for me, I came across an article by Tom David that challenges a lot of what I want to be true about partnerships.
Basically, Tom argues that their is and always will be a power imbalance between funders and NGOs. Our efforts to minimize that gap are only effective in complicating things.
I very much want to disagree with Tom. I believe it can be possible to work productively and closely with our partners, even serving as a board member in some cases, without being manipulative or exploitative. Still, there is a certain wisdom in maintaining an arms length relationship if we want things to remain crisp and clear. I've seen examples of closer involvement being deeply problematic.
I'd love to hear from some readers on both sides of the funder/NGO relationship on this. How close is too close? What are the advantages and disadvantages of more complex relationships?
One final thought: It seems to me that most charities (esp. churches) receive a bulk of their funding from people who are directly involved in what they are doing. So it must work sometimes...