Per diems are used to pay work-related expenses and motivate employees, yet they also can distort incentives and may be abused. This study was designed to explore perceptions of per diems among 41 high-, mid- and low-level government officers and non-governmental organization (NGO) officials in Malawi and Uganda. Interviews explored attitudes about per diems, benefits and problems for organizations and individuals, and risks and patterns of abuse. The study found that per diems provide benefits such as encouraging training, increasing staff motivation and supplementing salary. Despite these advantages, respondents voiced many discontents about per diems, stating that they create conflict, contribute to a negative organizational culture where people expect to be paid for all activities, and lead to negative changes in work time allocation. Work practices are also manipulated in order to maximize financial gain by slowing work, scheduling unnecessary trainings, or exaggerating time needed for tasks. Officials may appropriate per diems meant for others or engage in various forms of fraud for personal financial gain. Abuse seemed more common in the government sector due to low pay and weaker controls. A striking finding was the distrust that lower-level workers felt toward their superiors: allowances were perceived to provide unfair financial advantages to already better-off and well-connected staff. To curb abuse of per diems, initiatives must reduce pressures and incentives to abuse, while controlling discretion and increasing transparency in policy implementation. Donors can play a role in reform by supporting development of policy analysis tools, design of control mechanisms and evaluation of reform strategies.