Performance-Based Grant Systems: Concept and International Experience

Implementing the environmental, social, and economic policies necessary to achieve the Millennium Development Goals implies considerable financial resources. It also raises the complex question of how the resources can be deployed to greatest effect. Too often resources come pre-labeled or pre-packaged. A ‘thematic’ problem is identified and measures are designed and resources assigned to deal with it. This can be the case for health, education, agriculture, sanitation or a wide range of single issues. This publication shares the experience of UNCDF and others in designing and implementing performance-based grants. The piloting of performance-based grant systems demonstrates how local catalytic capital can be deployed to bring about real improvements in local development and poverty reduction by encouraging local governments to improve their capacity and focus on results.