What is the Performance Challenge Fund?

The Performance Challenge Fund, also known as the SGLG Incentive Fund (SGLGIF), is a financial subsidy the Department of the Interior and Local Government (DILG) releases to local government units that pass the Seal of Good Local Governance (SGLG). It is established under Republic Act 11292.

How do you qualify for the Performance Challenge Fund?

By passing the Seal of Good Local Governance (SGLG) in a given assessment cycle. SGLG uses an all-in design — an LGU must pass every governance area assessed that year to receive the seal and become eligible for the fund.

What can the Performance Challenge Fund pay for?

A single, new, whole priority development project drawn from the LGU's own Local Development Investment Program (LDIP) — DILG guidance points to projects supporting SDG attainment, local economic development, resilient communities, ecological solid waste management, or transparency and accountability. The LGU must contribute a counterpart of up to 80% of the subsidy amount; the project cannot be split across multiple smaller initiatives.

How large is the Performance Challenge Fund?

DILG reports more than PHP 11 billion released cumulatively across 5,711 funded projects nationwide, with the number of SGLG-passing LGUs rising from 352 in 2022 to 493 in 2023 to 714 in 2024. Individual subsidy amounts vary by LGU income class and project; DILG's own regional releases (for example, a PHP 4 million subsidy to the Province of Iloilo) illustrate the scale rather than set a fixed amount.

Is the Performance Challenge Fund the same as an NIC Innovation Grant?

No. The Performance Challenge Fund is a DILG program tied to SGLG passage. The NIC Innovation Grant is a separate program under the National Innovation Council, administered by the Department of Economy, Planning and Development (DEPDev) under Republic Act 11293, funding innovation projects for LGUs, SUCs, and GOCCs on its own application cycle.

Performance Challenge Fund

Also known as: SGLG Incentive Fund · SGLGIF · PCF

By Landon Little, Founder of Zentarai Labs · Updated October 3, 2026

TL;DR

The Performance Challenge Fund is DILG's reward for passing the Seal of Good Local Governance: a subsidy toward one priority project from the LGU's own investment plan, established under RA 11292. DILG reports over ₱11 billion released across 5,711 projects nationwide. It funds a single whole project, not a wish list — and it is a completely different program from the NIC Innovation Grant.

Status (October 3, 2026): DILG deferred the 2025 SGLG assessment (MC 2025-032), and its June 25, 2026 release says LGUs that already won continue implementing their funded projects. We found no new awardee list since the CY 2024 results. See the SGLG status page.

The Performance Challenge Fund (PCF), also called the SGLG Incentive Fund (SGLGIF), is the financial reward built into the Seal of Good Local Governance system. Under Republic Act 11292 (Seal of Good Local Governance Act of 2019), an LGU that passes SGLG in a given assessment cycle becomes eligible for a DILG subsidy toward a priority development project — the practical payoff for the governance standards SGLG measures.

How it works

Eligibility — pass SGLG for that assessment cycle. SGLG's "all-in" design means every governance area has to clear, not just most of them (see the SGLG explainer).
Project selection — the LGU draws one project from its own Local Development Investment Program (LDIP). DILG guidance points to themes including SDG attainment, local economic development, resilient communities, ecological solid waste management, and transparency and accountability.
Structure — the project must be new, whole, and single. DILG's own guidelines are explicit that this is not a fund for splitting into several smaller initiatives. The LGU contributes a counterpart of up to 80% of the subsidy amount.
Scale — DILG reports more than ₱11 billion released cumulatively across 5,711 funded projects, with 5,273 already completed. SGLG-passing LGUs have grown year over year: 352 in 2022, 493 in 2023, 714 in 2024.

Individual subsidy amounts are not fixed or public in a single schedule. They vary by LGU income class, region, and project. DILG's own regional coverage of specific releases — for example, a ₱4 million subsidy to the Province of Iloilo — illustrates the scale involved, not a guaranteed figure for every LGU. Confirm your LGU's specific allocation with your DILG regional office.

Not the same as an NIC Innovation Grant

The Performance Challenge Fund is easy to confuse with the separate NIC Innovation Grant, administered by the Department of Economy, Planning and Development (DEPDev) as secretariat to the National Innovation Council under RA 11293 (Philippine Innovation Act). The two are unrelated programs with different legal bases, different administering agencies, and different application cycles: PCF eligibility runs through SGLG passage with DILG; the NIC Innovation Grant runs through its own annual call for proposals open to LGUs, SUCs, and GOCCs. An LGU can pursue both.

Where this fits in an LGU's planning cycle

The Performance Challenge Fund is downstream of the same Local Development Investment Program that draws on an LGU's 20% Development Fund allocation under DILG-DBM Joint Memorandum Circular 2017-1, and its eligible-project categories overlap with what a well-maintained Comprehensive Land Use Plan under RA 7160 already identifies as priorities. Eligibility runs through passing SGLG, so this funding path reopens for new LGUs only when DILG resumes the assessment.

Related terms

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