What is output-based aid?

The Global Partnership on Output Based Aid have a 30-page paper explaining just that:

OBA subsidies are explicit and performance-based. They are explicit because they ensure recognition of why the subsidy is being provided, who is receiving the subsidy and who is providing it, and what is being subsidized... OBA is performance-based because it strongly links the payment of service providers to their delivery of specified "outputs". By contrast, in many other approaches, donors or governments pre-fund "inputs".

Want more? The 'Contracting for Public Services' book contains numerous case studies and is available for free download.