Have you ever found yourself blindsided by this question: “Do you have a Theory of Change?” You might have heard the term Theory of Change in passing before, but perhaps it did not stick. What is it and why do you need one? Does every organization need a Theory of Change? Is it more relevant in the nonprofit sector, or does it apply as well in business? Simply put, a Theory of Change is a powerful framework that enables a venture to articulate what it does and why. It also enables the venture to express what it hopes to achieve and what strategies will enable those outcomes. So if you have ever found yourself struggling to explain the short term and long term impact of your organization, you need to read on.
What is a Theory of Change?
One definition says that “setting up a Theory of Change is like making a roadmap that outlines the steps by which you plan to achieve your goal”. Another says that “Theory of Change explains your organization’s intended path to impact by outlining causal linkages in an initiative”. Essentially, a Theory of Change challenges you to imagine the grand future that you intend to help create and then explain how you hope to get there. It is like laying out the architecture of a building before you begin to construct the foundation and lay out the scaffolds. What would it look like if you attempted to build a bridge across an ocean and then you realize halfway that maybe a boat was the right idea? That’s what it looks like when you launch an organization without a clear Theory of Change.
At the point when you when you were first asked about your Theory of Change, it is likely that someone had identified a gap between the activities that your organization has laid out and the impact that you intend to achieve. This is a classic scenario in nonprofit organizations and social enterprises. Many entrepreneurs seeking to do good in the world are quick to create projects out of their ideas and they hit the ground running. But when asked about the expected long-term impact of those projects, they struggle to show evidence of a causal relationship.
Why causality is important
The principle of causality states that an action must influence the outcome for the relationship to be causal. In other words, this is classic cause and effect – one event leads to the production of another event. For an organization whose mission is to end homelessness in the world, launching after-school tutoring programmes might be a noble idea, but the correlation between the programme and the mission must be very clear. Otherwise, the programme might have no chance of contributing toward the expected outcome. Similarly, an organization that sets out to advocate for the rights of people living with disabilities may struggle to justify a street feeding programme.
In both of these examples, the programmes launched might be reasonable and welcome, but the key question is how they will contribute to the long-term mission of both organizations? For instance, the first organization might tailor its after-school tutoring programme to children from homeless shelters, thus providing them a chance at a better life and ensuring that they do not replicate the same cycle of homelessness that got them there in the first place. The second organization might also provide food for people living with disabilities as an early intervention to accord them dignity. Therefore, the causality is in the linkage between the intervention and the expected outcome.
How to create a Theory of Change
The first step in creating your Theory of Change is to define a clear problem/opportunity statement. This is very likely to come from the organization’s mission. What is the issue that you are hoping to tackle? Is it a subset of a larger issue, or is it all-encompassing? What are the causes? What are the consequences of inaction? In this process, it will be helpful to also identify the people who are most affected by this problem. Are they confined to a particular location? Do they fall into a particular demographic of age, gender, nationality or ethnic group?
Building on this, you want to outline your organization’s core competencies and unique ability to contribute towards solving the problem. Do you have the right resources, or do you have the network to mobilize those resources? Do you need to work with other partners? As you assess the external environment, you should also think about the other forces that could make your work difficult. For instance, are there legislations in place that govern that jurisdiction?
You may then begin to imagine the impact that you hope to create, perhaps long after your intervention is over. How do you expect your target group to be better off five years, 10 years or 50 years from now? What will be the direct impact of your work, versus the knock-on impact that builds on your work? What are the changes in the capacity of your beneficiaries that you hope to see? And finally, what are the appropriate activities to create to deliver those outcomes?
Don’t Strive for Perfection
It is very important that you note that the goal is not to have a perfect Theory of Change. The goal is to have a working theory that outlines how you hope to create change. Your theory should evolve as constantly as the factors in society evolve. For instance, if there are changes in legislation or changes in the economic conditions, you should adjust your theory accordingly. It is absolutely crucial to keep a list of assumptions to help you identify the limits of your capacity. For instance, in the case of the organization seeking to end homelessness, an assumption might be that you will work through existing homeless shelters in your city so that you do not need to track homeless people all around time by yourself.
Many organizations use a Theory of Change in strategic planning as well as in programme evaluation or impact measurement. This is why most people believe that it is more relevant in social organizations than in commercial ventures. That said, a business might do very well to create a Theory of Change for itself. It just might help with giving the venture a soul and a sense of purpose. After all, what could be wrong with defining how a set of activities will lead to a defined outcome?
It’s all about implementation
In conclusion, a Theory of Change is only as useful as its implementation. There is no good to be done by creating a perfect theory and then never revisiting it. The theory should be at the heart of everything the organization does. It should influence the organization’s operational strategy, the hiring process and the evaluation of programmes and staff. Once you put in all the work to develop your theory of change, you better put it to use.
Does the process of developing your Theory of Change sound daunting? You are not alone. Many organizations struggle with this, and many founders of social enterprises in particular face this challenge. You often need an external party to help to develop your Theory of Change. Let us help you get this critical piece right.