What is a theory of change and why does it matter?

There is a huge range of literature about theory of change to be found online. At its simplest, a theory of change is a means of visualising the way(s) in which we think a particular impact is created. This demonstrates 'pathways to impact' by showing how the inputs, activities, outputs and outcomes of an organisation or initiative link together. While simple in its essence, how we develop a theory of change can have a big effect on its value and usefulness.

A theory of change can apply to a whole organisation, a particular program, a cross-organisational partnership or a single event. When actively used and reviewed, a theory or theories of change allow us to assess over time whether we are having the impacts we hope to have, how these are occurring, and whether there are any unanticipated (positive or negative) outcomes occurring because of the approach we have taken to solving a problem.

The table below provides one worked example of how you can set out a theory of change. 'If we' refers to the inputs, 'by' refers to the activities and/or outputs, 'it will result in' refers to the outcomes, and 'and ultimately' refers to the impact.

(Adapted from the theory of change canvas in Social Enterprise Fundamentals Workbook,[^1] p.8.)

Hot tip: when developing a theory of change, always start with the impact/problem you want to solve and work backwards!

Some of the benefits of developing a theory of change include:

• Getting on the same page about what we think we are doing and how we think it is happening. It is amazing how often people working even in close teams have different views of the work they do. It is equally amazing how often people who have direct experience of a particular problem can have very different insights about whether and how a particular initiative works (or doesn't).
• Documenting a process which can be revisited and reviewed. While not a planning tool, a theory or theories of change can support ongoing monitoring of particular programs and provide the basis for reviewing whether planned inputs, activities and outcomes are occurring and/or sufficient to address the identified problem/mission.
• A current theory of change also provides the basis for developing an evaluation framework, through which outcomes and the processes by which they occur are assessed.

Some of the limitations of using theories of change are:

• A great deal of effort can be wasted if a theory or theories of change are created and then not used. Best use of theory of change work involves maintaining these as living documents, with planned opportunities for different stakeholders to review and discuss them.
• Some theories of change seek to visualise highly complex relationships between different inputs, activities, outputs and outcomes. While these look impressive, they can become limiting when trying to evaluate impact pathways. Finding a happy medium between the true complexity of adaptive social change and the functionality of a workplace tool makes for a useable theory of change.
• Theories of change created through top-down processes by, for example, a small group of managers or directors with limited on the ground experience of a particular program or change process can result in poorly conceived impact pathways. Theories of change are best developed with meaningful input from a variety of people with experience of both the problem and the change process.
• Even where treated as living documents, theories of change can be less useful in contexts of rapid change or innovation. Here, developmental approaches to evaluation can be more useful than the program logic approach typical of drawing on a theory of change.

Seedkit provides indicators for the inputs, outputs/activities, and outcomes consistent with a theory of change. These can be used to build an online version of your impact pathway(s) to support ongoing review of your organisational or program-level theory of change. Some models of social enterprise have their social impacts 'baked in' to their business model. This means that understanding business fundamentals, such as the cost structures of addressing a particular social need, can be quite important when documenting how a social enterprise achieves results. Use the operations indicators of Seedkit as part of building your impact pathways.