Biodiversity conservation in developing countries has been a challenge because of the combination of rising human populations, rapid technological advances, severe social hardships, and extreme poverty. To address the social, economic, and ecological limitations of people-free parks and reserves, incentives have been incorporated into conservation programs in the hopes of making conservation meaningful to local people. However, such incentive-based programs have been implemented with little consideration for their ability to fulfill promises of greater protection of biodiversity. Evaluations of incentive-based conservation programs indicate that the approach continually falls short of the rhetoric. This article provides an overview of the problems associated with incentive-based conservation approaches in developing countries. It argues that existing incentive-based programs (IBPs) have yet to realize that benefits vary greatly at different "community" scales and that a holistic conceptualization of a community is essential to incorporate the complexities of a heterogeneous community when designing and implementing the IBPs. The spatial complexities involved in correctly identifying the beneficiaries in a community and the short-term focus of IBPs are two major challenges for sustaining conservation efforts. The article suggests improvements in three key areas: accurate identification of "target" beneficiaries, greater inclusion of marginal communities, and efforts to enhance community aptitudes.