Indirect reciprocity is increasingly recognized as a desirable approach to support social organizations which address intractable social problems within societies. Using social organizations operating in the third sector in Tanzania, we investigate how causal mechanisms help social organizations to initiate indirect reciprocal relations with benefactors. Moreover, we address the potential consequences of such relations to both benefactors and social organizations. Our findings reveal that establishing reciprocal relations is contingent to the credibility of social organizations and compassion capability of benefactors. Also, the findings identify positive and negative consequences of indirect reciprocity to both benefactors and social organizations. Based on these findings, we clarify the contradiction regarding the consequences of indirect reciprocity and propose a framework of inter-organizational reciprocal relations that fosters social entrepreneuring in the third sector. Furthermore, we highlight the implications of our findings for theory and practice and suggest areas for future research.