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Theory of Change: What Is It And Why You Need It?

Apr 29, 2021 | by natasha

Theory of Change

As a social organization, you might hear this term a lot more lately, especially coming from your donors or impact investors. Also, more and more big organizations are incorporating this framework, even UNICEF uses the Theory of Change (ToC) for their strategic planning.

Now, you might wonder, what is it exactly and why do I, as an organization, should utilize it in my projects?

What is the Theory of Change?

Based on Impact Management Project, a forum that builds global consensus regarding impact management and measurement, ToC is a comprehensive description and illustration of how and why the desired change is expected to happen in a particular context. 

ToC is a multi-purpose tool that was designed to help in the planning of complex interventions. As this framework can give you more details on how interventions planned could actually work. It helps organizations, from NGOs to social enterprises to charities, to map out or fill in missing links between what a change project does and how it could lead to desired goals being.

Or in a simple way, ToC is a tool that can connect the needs and your path from input to impact. This tool will show the link between important components to understand your impact and even shows the link between your different goals. 

 

What are the components of the Theory of Change?

We believe there are four main components of the Theory of Change; input, activity, outcome, and impact. It is crucial for you to define all of them in your ToC.

Input

Inputs are the resources needed to carry out activities. It is what organizations invest in their project, such as volunteer hours, money, expert skills.

Activity

This is the action you need to take in order to change the input into the outcome. You can do several different activities, and each of these activities implementation will have direct product that we usually called as output. The activity and its output are directly related to the outcome, therefore it is necessary to track output in order to indicate that the outcome will be on track.

Outcome

An outcome is defined as a change that people you want to affect experience because of your intervention. This result could be intended or not, and it can be in a lot of different forms, such as behavioral change as a result of changing actions, awareness from learning, and/or a change in environmental conditions.

A strong ToC should involve short, mid, and long-term outcomes. A stakeholders survey that includes baseline, mid-line, and exit-line, is needed to measure these outcomes.

Impact

The Impact is a systemic and long-term change that was created for your stakeholders because of your interventions. Since creating an impact takes years, it is hard to measure them. But, we can measure the outcomes within our reach that lead to the impact that we expected.

For example, for a food security movement called Peduli Pangan, the main impacts they wanted to create was

  1. Better livelihood for farmers
  2. Sustainable food supplies for the demand points (e.g. emergency kitchens for urban poor in difficult situations like Covid-19). 

As achieving these impacts can take a lot of time and therefore is difficult to measure, they set immediate and mid-term outcomes they would like to achieve, and which would ensure they reach their ultimate impact goals.  

In order to make sure they reach these outcomes, they connected farmers and demand points by receiving the food supplies from farmers then distribute them to demand points. These food supplies then will be cooked by local people, that will distribute the cooked-food to urban poor.

From these activities, they will be able to see number of farmers that are able to sell via Peduli Pangan, details of those supplies, and how these farmers’ sales are increased. Besides that, they will be able to measure number of demand points that are able to receive food supplies, number of urban poor that received the cooked-food, and how these urban poor daily intake increased.

To execute this movement, they need a lot of inputs, such as logistical resources, a fee to pay the staff, also manpower to help distribution and all related transactions.

impact management platform

How can the Theory of Change help you? 

ToC needs you to first identify your desired long-term goals or impact, and then it requires you to walk back from these goals to identify the outcomes or conditions that must occur in order for the goals to be achieved. 

Defining your ToC can also clarify the underlying assumptions throughout your project. It helps you to figure out what are the supporting evidences you need to find for each stage that could be used to measure and ensure that your actions are on the right track to deliver the goals you are expecting.

Based on IRIS+, which has been used by impact investors to measure and manage their impact, a TOC can do that, because it will require you to:

  • Describe the problem that you want to solve
  • Consider stakeholders that you are trying to affect
  • Define how you will be contributing to solving the problem
  • List your key actions and assets that you will allocate
  • Consider your constraints/limitations
  • Specify your short and long term goals
  • Describe your expected measurable effects

Why should your organization adopt the Theory of Change?

A good ToC will bring you a visualization of your project clearly because it takes into account all the key aspects of your project. Not just that, a good ToC can show you:

  • Whether you are doing the right actions
  • What do you need to create the impact
  • Any negative or unintended outcomes that do not help you to achieve the goals
  • Way to measure your impact and show success

Strong ToC can lead you to a lot of other benefits. A paper published by NPC, New Philanthropy Capital, stated that Theory of Change is beneficial in 3 different ways:

As Strategy

You can use ToC as your strategic review that brings all of your organization’s members to focus on the change, goals, or impact that you want to achieve, instead of how the organization is doing currently. Because, it considers the causal link, stakeholder’s perspective, and needed evidence to support the initiatives.

Assumptions that might be unnoticed could also be revealed through a ToC. You want to know whether your assumptions are actually based on evidence or it’s just another constraint and whether it can be changed. 

This way, you will know if you are doing the right thing or not. The more evidence-based you are in your ToC, the more likely your approach will work. 

A good ToC also involves and aligned all stakeholders in your project, not just your team or your donor, but also the people that you are trying to affect by your actions. Diverse perspectives, backgrounds, and experiences can give you a better direction on what to do and why you need to do it. 

Since ToC requires backward mapping, not all organizations are comfortable doing it and will find it difficult. However, it is very crucial to implement it because ToC is a strategy for you to design what is actually needed to reach your goals. 

strategy for ngos

As Evaluation

Theory of Change is an important basis for you to measure and then evaluate. In order to understand your success, you need to start measuring the right parameters or indicators. These indicators can be derived from understanding your key outcomes. Which is exactly what a ToC does.

Then, figuring out whether your outcome is realistic and measurable or not by your organization. By this, it will actually help you to comprehend the resources you have, understand your limitations, and open you up to seek out collaborations.

By measuring, you know whether there’s a change happening, how it is happening, and by how much. Also, you will understand how each outcome is connected and affecting the result you are expecting. 

Most importantly, ToC helps organizations become transparent and evaluate the progress towards their final goals. Since there’s a lot of initiatives that can not be easily measured or take a long time to measure, ToC can help you measure the intermediate outcomes towards the long-term outcomes. Or even determine whether these intermediate steps are the ones that an organization needs to achieve the ultimate goals.

Help you consider your place in this social sector

This framework can help you get a bigger picture of how different organizations are working and could work together toward their impacts & create a greater impact together. 

As mentioned in the evaluation section, ToC can help you evaluate as an organization, and figure out if your actions will be able to help you achieve all your outcomes, which you need to achieve to reach the final goal.

By understanding this, it is actually helpful for you to figure out who are the players that can achieve those outcomes and whether you need to work closely with them or not. Then, what are the common strategies you need to build together to create a bigger impact?

ToC is not just a useful tool to measure your own work, your work with your partner, but also the whole sector. This way you can even share resources, knowledge, and techniques in developing your initiatives. 

Besides that, the components defined and measured based on the Theory of Change, can make your Social Return on Investment modeling to become easier. And as we know, ToC allows you to measure then effectively communicate your impact to your important stakeholders, e.g. upper management, volunteers, donors, and the public. 

This is not just to help you gain more support but also helps you to document all your lessons learned, evaluate, improve, then allocate your resources into the right actions. 

Read more about:

Impact Measurement & Management

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