The question of scale is indeed crucial. However, what has to be scaled up is the idea and not necessarily the NGO as an organization. These are two different things!
Secondly, the scaling up can happen not only through the government - but also through many other organizations picking up the idea. What is important is to have the necessary eco system to enable such scaling up to happen. It maybe through appropriate financing and supportive policies. The important aspect is to design actions/ projects that are likely to be picked up in this manner or that there is "a market' out there - either through government or through other NGOs/ social entrepreneurs etc.