Participatory project planning is a collaborative approach that involves stakeholders in the design and decision-making process of donor-funded projects. It ensures that the perspectives and needs of the beneficiaries are taken into account, leading to more effective and sustainable outcomes. By engaging stakeholders from the outset, participatory project planning promotes transparency, accountability, and ownership among all parties involved. This inclusive approach enhances project performance by fostering a sense of shared responsibility, increasing local knowledge and expertise, and promoting effective communication and coordination. It enables donors to achieve their development objectives while empowering local communities and building their capacity for long-term success. Research discovered that participatory project planning in Khulna significantly enhances community engagement and participation. Participatory project planning in Khulna leads to the development of projects that are more relevant and effective. By incorporating the perspectives and knowledge of local stakeholders, these projects are better aligned with the local context and are more likely to achieve their desired outcomes. The study concluded that participatory approach ensures that all stakeholders, including community members, local authorities, NGOs, and donors, have a voice in the decision-making process. Effective project performance management, including monitoring, evaluation, and learning, is critical for the success of donor-funded projects. The study recommended that there should be emphasis on capacity-building initiatives in order to enhance the skills, knowledge, and participation of the local community. Establish mechanisms for sharing best practices, lessons learned, and successful project outcomes among stakeholders. Encourage regular learning and reflection sessions to identify innovative approaches, challenges, and solutions. Regularly report on project performance to ensure transparency and strengthen accountability to the local community, donors, and other stakeholders.