PERFORMANCE-BASED FINANCING (PBF) is a powerful means of increasing the quality and quantity of health services by providing incentives to suppliers to improve performance and achieve results. In support of the Millennium Development Goals, PEPFAR, the Global Health Initiative (GHI), and other important health initiatives, PBF can increase the use and quality of health services, stabilize or decrease the costs of these services, help use limited resources effectively, and improve staff motivation and morale, a proven incentive for staff retention.