This paper explores the contrast between the policy vision for public technical and vocational education and training (TVET) colleges in South Africa, and governance and funding models that have shaped institutional forms and functioning over time. Policy aspires for TVET colleges to play a role in social inclusion and local economic development. The paper provides a historical tracing of shifting regulatory and funding models, a local manifestation of the global shift to market-based funding, pseudo-employer-led reforms and accreditation mechanisms introduced through new public management-style public sector reform. The result is complex policy levers with conflicting governance and institutional models, producing bifurcation and weakening institutions. Colleges have been renamed, restructured, given new governance models, and shaped by contradictory and shifting programme, curriculum and qualification policy. Today, they are public institutions required to contribute to public policy goals, but treated by funding mechanisms as providers competing for contracts with for-profit and private non-profit providers. Individualised capacity building and a governance system that has at its core the idea that vocational education should meet the short-term needs of employers have undermined institutional capacity and coherence, and ability to develop institutions that can actively engage with social and economic development and inclusion.