The purpose of this handbook is to help strategic objective teams-those responsible for program management-develop indicators that are useful for management decisions. Although it is primarily directed towards USAID democracy and governance (DG) officers and their partners, it may be of use to others who have similar development programs. Performance monitoring is a necessary and integral part of good program management. It is also related to the 1994 Government Performance and Results Act (the Results Act), the intent of which is to improve Federal program effectiveness and public accountability. To this end, performance information from each operating unit is combined with broader trend information within the Agency's goal areas to report results to the Office of Management and Budget, Congress and the public in compliance with the Results Act. The same basis informs the Agency's budgeting process. Nevertheless, the primary purpose of performance indicators is at the operational level: to assist in making programmatic decisions and learning from past experience. The indicators included in this handbook were developed by four working groups, each responsible for one of the Agency's four democracy objectives: 1) strengthened rule of law and respect for human rights; 2) more genuine and competitive political processes; 3) increased development of politically active civil society; and 4) more accountable and transparent government institutions. The groups included USAID officers, NGO staff members, performance measurement experts, InterAmerican Development Bank and World Bank staff, and others interested in improving monitoring systems for democracy programs. Starting with the democracy-governance portion of the Agency's strategic framework, each working group developed or refined a hierarchy of objectives against which progress can be measured. Then indicators were developed to capture progress in meeting each objective in the framework.