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New Approach in 2020 & Beyond

Theory Of Change

Theory | Examples | Templates | Resources

What is Theory of Change?

Theory of Change Definition

Theory of Change (ToC) explains your organization's intended path to impact by outlining causal linkages in an initiative (i.e. its shorter-term, intermediate, and longer-term outcomes).  The identified changes are mapped in an “outcomes pathway” that shows the logical relationship and chronological flow between outcomes along the path to the desired impact. The links between outcomes are explained by “rationales” or statements of why one outcome is thought to be a prerequisite for another and can be updated on the basis of evaluation evidence.

For example, it has been assumed that improving the educational outcomes of children in a region will lead to the community’s ability to adapt to new agricultural practices when these children reach adulthood, thereby improving the yield of mint. 

This assumes that the children will remain in the region and work on farms. However, what if an unintended consequence of improved education was the loss of these young adults to higher-paying jobs in urban regions thereby depriving the farming community of labor and skills? 

By exploring the theory of change of this project, we clarify the underlying assumptions and know what supporting evidence to seek at each stage to confirm that the project is on track to deliver the intended impact.

Watch and Learn

Chris Gains, Lead SoPact Trainer explains step by step theory of change with examples


Watch and Learn

Now that you know what theory of change is, let's build an effective theory of change. Here is how - 


Theory of Change vs Logic Model

What is the difference between the logic model and the theory of change?

In general, both a logic model and a theory of change communicate how change is expected to be created. A logic model usually focused in on a specific program or intervention, mapping in a linear way how the inputs, activities, etc. lead to expected outputs and outcomes. It will contain less contextual elements (for example, of the problem being addressed) compared to a Theory of Change model.

In short, they both show how an intervention will create impact results. The differences are in to what extent and where they focus.

Here are some of the key differences:

  • A Theory of Change is used at design and evaluation stages, while a logic model will be used for monitoring.
  • A Theory of Change is usually presented as a diagram and accompanied with a narrative, while a logic model usually stands on its own (without a narrative) and tends to be a much more linear (while still diagrammatic) presentation.
  • A Theory of Change will sometimes include information about the wider context of the problem being addressed, while a logic model sticks to simple mapping of a program's activities (from outputs to outcomes).

With all this said, there is no completely standardized definition of one or the other, and many organizations use the terms interchangeably.

This image from Tools4Dev demonstrates visually some of the key differences mentioned above.

theory of change model compared to logic models


Read More: What is the Importance of Theory of Change in Impact Evaluation

Watch and Learn

Sachi Shenoy, Chief Impact Officer of Upaya Ventures describes how Social Enterprise with the goal of minimum 1000 jobs per social enterprise


Theory of Change Model - New Approach

A Theory of Change (ToC) documents the change (impact) that you are seeking for both accountability and internal awareness of potential organizational challenges. In the ToC, the primary challenges indicated are your underlying assumptions. 

An assumption (no matter how strongly you believe it to be true) is, after all, an assumption. Woven into the fabric of every Theory of Change is at least one grand assumption. For example, that providing free shoes improves the overall quality of life. As we saw with Toms Shoes, an assumption that is not thoroughly explored can lead to negative consequences. In this case, in-kind donations replaced local markets and hurt the economy of the community served. 

When researching Theory of Change you will quickly realize how complex it is. Mapping out the long-term path you intend to take in such a way that you surface the hidden assumptions is no easy task. There are hundreds of different examples of ToCs to build from along with thoughtfully constructed templates.

Read More: How to Use Software to Make Theory of Change Models?

Watch and Learn

Unmesh Sheth, Founder of SoPact explains best practices of building an effective theory of change and align them with impact metrics


How does the theory of change work?

Are you a social or environmental purpose organization wanting to create a long-term change with your activities and resources? Are you being required to report on your impact, but aren’t sure where to start? 

Currently, the two most accepted and wide-spread frameworks to document your impact measurement and management strategy are: Theory of Change, and the 5 Dimensions of Impact by the Impact Management Project. Today’s video will focus on how to define your organization’s Theory of Change.


The Theory of Change is the foundation for any mission-driven initiative working on solving the globe’s most pressing social and environmental issues.  Sometimes referred to as T. O. C., the Theory of Change documents the impact that your organization is seeking to achieve, as well as all the intermediate steps to make sure that your activities and resources are well aligned with said change.  The TOC should be defined before starting any new initiative or project, and needs to be revised periodically, as your initiative evolves. 

This article will help you make your impact strategy actionable through the Theory of Change framework. And, in the future, we will also discuss the second most common impact strategy framework: 5 Dimensions of Impact by the Impact Management Project. 

We will also go in-depth into impact metric selection, data collection strategy, and impact reporting. 

So don’t forget to smash that like button, subscribe, and click that notification bell so you don’t miss any of the upcoming content we have planned for you.

Without further ado, let’s jump into the foundation of an effective impact measurement and management strategy: Theory of Change.

Let’s start by discussing what makes the Theory of Change such a fundamental step?

All the operational decisions around what outcome data to collect, assess, and analyze, AS well as the changes that need to be made to improve the effectiveness of your intervention, ALL depend on your Theory of Change. The key value of this framework is that it fosters accountability and awareness about the potential challenges that your organization might face while pursuing its mission. 

Now, as mentioned before, the theory of change ideally needs to be defined before starting your initiative, project, or program. 

These initiatives might have a broad scope such as Higher Education, Health and Wellness, or Financial Inclusion.

Or, they might have a narrow scope, such as Job Readiness, Maternal Health, or Housing Loans. 

Whatever program structure you decide to use, make sure that it’s aligned to your Mission statement and that you are not overcomplicating it. Even if you work with partner organizations across a wide spectrum of issue areas, stick to outcomes that are a significant part of the scope of your organization. 

Now, we’re ready to create a sample Theory of Change for an organization called "AmericaWorks" with the program, "Skills Development."  

We’ll start from the desired impact, and work our way backwards to the resources we’re putting into our programs to make this impact or change happen.


Theory of Change Components


Step One: Impact

The impact is the systemic change that you expect to see in the long-term. Impact usually takes a few years to happen, which makes it difficult to measure, but it does give us a great foundation to define the outcomes which are within our reach to influence and measure. 


Step Two: Outcomes

Outcomes are the intended and unintended changes that your stakeholders are experiencing or might experience with your intervention. In other words, outcomes are the broader benefits we work to achieve. In our Skills Development example, one outcome could be “increasing job placement”. How do we know that we are increasing job placement? - By keeping an eye on the number of people placed and retained after their onboarding training.

A well-designed Theory of Change should include long-term, mid-term, and short term outcomes. As you demonstrate clear improvement in your outcomes, you are more likely to get other players such as government or public and private partners to step in to help you scale your mission.

Good outcome measurement requires designing a stakeholder survey that includes baseline, mid-line, and exit line results.

Step Three: Outputs

The outputs are the immediate results of our activities or products, and they are necessary for achieving the outcomes. Think of them as positive indicators that the outcomes are on track. 

As per our Skills Development example, one output could be the “increase in the number of people graduating from our business training”. In this case, we are assuming that as more and more people go through a quality marketable training, there is a greater possibility of an increase in successful job placements. To dig deeper, collecting some demographic data, along with service data can help to draw useful connections. 

Step Four: Activities

In this step, we answer the question “what activities need to take place for each output to happen?”

Providing people with high-quality training is one of the activities directly aligned with our sample output and outcome. Along with quality skill-building training, an activity can also include resume preparation, or interview preparation. All of these increase the number of successful placement possibilities. 

Step Five: Inputs

Inputs refer to the resources or investments needed to ensure that the activities take place. According to our example, we need need quality course materials, skilled trainers, a physical venue or an online host, investment, and more.

So, to recap:
  1. The five components of a Theory of Change are: Inputs, Activities, Outputs, Outcomes, and Impact.

  2. The TOC needs to be aligned to your initiative, project, or program and stated mission. 

  3. The most important components to monitor are the Outputs and Outcomes, so make sure to define relevant metrics and track results over time. 

  4. And, Everywhere possible, we should include stakeholders data, such as demographics and surveys to capture their feedback. 

Finally, it’s important to highlight that implementing an impact measurement and management strategy requires some change management. Here are some quick tips to ensure success throughout this process:

  • Involve your key stakeholders. A stakeholder is any person benefited or affected by your activities. 
  • Communicate your intent to implement or improve your impact measurement and management strategy. In the beginning, this might be done through information sessions open to anyone interested in learning more about the new impact measurement process. 
  • Remember that the desired outcomes motivate people. Be sure to expose the need for change to the whole organization and clearly describe how the change will benefit each area of the organization.


Here at sopact, we understand that organizations just like yours face challenges with impact measurement and management on a daily basis. So we’ve developed a platform that streamlines the process, starting by documenting your Theory of Change.

Read More: 5 Ways to Improve TOC models for Non-Profit Organizations

Read More: How to define Social Impact Outcome Metrics?

Building a Theory of Change Model

Now that we know what is Theory of Change, why it is important to have one and what are those essential elements it includes, question is what how do we start? You can refer step by step guidance in Actionable Impact Management Guidebook Volume One: Groundwork

Theory of Change - steps for building successful TOC Models and Bringing ChangeEach step builds on the last you might have noticed, but each step is designed to inform the next. Skipping steps might lead to inconsistencies in the impact measurement strategy you are designing. You can use some of the templates provided in the Guidebook. 

There are some Theory of Change tools available and they can help in initial strategy. They do not have a complete data management thought process behind them so they only provide primary design.


Why go beyond traditional ToC tools to advanced ToC driven platforms?

Once you build ToC, next step is selecting Metrics. It will become complicated when metrics have to be aligned with standards just as SDGs, IRIS, BOND etc, collect data, analyze, get insight and report. SoPact Impact Cloud has introduced a freemium version of a theory of change application that allows any mission-driven organization or sustainable business to build a step-by-step impact strategy with a faster path towards a robust data-driven impact journey to follow. 

Unlike many theory-of-change-based software or tools, Impact Cloud is the fastest way to build an overall impact strategy and to start a data-driven impact journey.

Key Innovative Features include:

  • Build multiple Theory of Change as per different program needs
  • Use industry aligned indicator sets or metrics sets
  • Use well defined outcome and survey sets
  • Impact Statement to refine impact strategy
  • Impact Map as Impact Knowledge Graph
  • Global Impact Metrics Catalog
  • Align with Standard Global Indicators
  • Create Custom Indicators
  • Align with Impact Thesis (Custom vs Sustainable Development Goals and Targets)
  • Data Strategy
  • Automatically calculate impact results
  • Broad range of reporting formats 

Read More: A Complete Guide to Building Your Impact Strategy

Theory of Change Examples

The Center for Theory of Change, a non profit organization dedicated to promoting best practices in ToC, has created a valuable database of existing Theory of Change models from organizations around the world.

Here are a few direct links to some of those examples:

Read More: Role of Impact Metrics and How to Choose the Right One

Logic Model or Theory of Change Example

Upaya social ventures is a Seattle based impact fund.  Their mission is to create dignified jobs and eradicate extreme poverty.  Their work most closely aligns with SDG 1 & SDG 8.  Let's dive deeper into the logic model and metrics they use to measure decent work and economic growth and the eradication of extreme poverty.

This is a thought-provoking and expert video that every impact practitioner should listen.

As Sachi Shenoy, a founder Upaya Venture Says "The first question everyone asks is, how do you create jobs?"

Well, we create jobs by supporting the entrepreneurs that are building businesses in marginalized communities in India that we feel have the potential to employ the ultra-poor.  Upaya social venture identifies high potential enterprises very early in the game and we make seed investments, this is patient equity capital that we invest and then we coach entrepreneurs to help them grow their businesses we advise them on operations and financial management and we facilitate connections to their next round of investment so they can keep growing well after they have worked with us if we do our job well

The following video gives a deeper  logic model that helps us very systematically breakdown our intervention and

  • Think through step by step
  • What is the cause and effect of what we do?
  • With any logic model, you should start with the inputs

By doing all these activities what we are really hoping is the immediate output are profitable, self-sustaining and scalable enterprises and if these businesses are all those things, they should create new jobs for the poor and these are the things that we have some control over as upaya because this is how we work hands-on with our entrepreneurs. Founder Sachi from Upaya advise enterprises on how to make their systems more robust and their businesses more profitable and so we hope that yields more jobs

But then after that what happens is a little bit out of our control

But we certainly hope it happens because that's what our mission is

and that is these new jobs should provide stable and increased income for jobholders and that income should move those jobholders out of poverty and

We will look at how it moves job holders out of poverty along a number of dimensions

Once we have defined all the steps of our logic model we can then define the metrics that

Correspond with each of these steps and these are the quantitative measures that give us an idea of whether we are on track or not with our mission statement for

Especially for us, it's important to report to the spirit of the SDGs. SDG number eight doesn't say just the number of jobs. It cares about decent work.  These are jobs that must pay fairly pay well be dignified and move people out of poverty, right?


Let's review Upaya's Logic Model below and get an in-depth understanding of achieving a goal. 










Listen to one the most thought provoking webinar below.



How to Measure Impact of a Program?

If you are working within a designated community toward its general improvement, you face some unique challenges when formatting your impact framework. You may find that the internal politics of funding plays a particularly prominent role within such a condensed environment. You might also find that your organization’s focus areas are fluid, and occasionally being stretched to incorporate an organization who’s scope rests outside the main categories.

Maybe you’re not worried about your program structure. After all, what’s the use of a well-defined program structure? Well, it all boils down to impact communication. Your organization's program structure is a blueprint of your organization’s impact identity. Program Structure is one of the first activities of Actionable Impact Management, found inVolume One: Groundwork

A simple program structure might look like this:

How to Measure Impact of a Program and Role of TOC in Evaluation

Turns out the structure of programming is not a one-size-fits-all. This is especially true of organizations with a fluid set of focus areas. Community foundations, impact funds or impact investors who focus on place rather than issue area all have a similar problem when it comes to the program structure outlined above. Namely, that it does not account for their Vision and Mission. Your goal is to strengthen a community – not further education or safety.

To answer for this while continuing to communicate the importance of the focus areas, you might distinguish between what your organization cares about and how your organization cares by structuring your programs in the following way:

Using Theory of Change Models for Impact M&E

This helps to remind your staff, board and advisors of the scope of activities performed by your organization while also embedding the focus areas that represent the intended community impact.


Program Theory Of Change

Once you have defined complete program structure, you can start building theory of change of each programs.  For each program, it is important to realize a common indicators that can allow organization to define aggregate results.

Read More: How to Find the Right Impact Funds for Your Organization

Theory Of Change & Impact Investment

While there is a relative consensus that impact management is critical to impact investing, mission-driven organizations tend to focus more on "impact measurement" than management. To have good impact measurement it is essential to have systems, tools, and resources in place to manage impact at all levels.

The primary driver for impact management is to ensure investees or grantees better understand the social and financial effect of their product or services. In short, this helps encourage accountability to the Theory of Change of an organization and/or a funder.

Strong impact management also enables these actors to better align high level outcomes with lower level, and drive impact learnings at the funder level.

Collaborative impact management, for example when investors help investees improve their data management capacity, can help improve impact outcomes for both stakeholders. Investees are able to make better data collection decisions which will eventually inform important management decisions.

 To promote Theory of Change accountability there are many key questions that investors must address with investees in their portfolio:

  • The distinction between expected impact and realized impact. It is important to have normative benchmarks for impact performance to help set realistic expectations and compare with the actual.
  • The relationship between aggregation and financial incentives.
  • Not over claiming impact
  • Aggregation across asset classes and attribution. 
  • The incentives, financial and otherwise, around all of this are key. If there is a (perceived) risk on the management team’s part that a stakeholder group will get pissed off if you engage them about their experience, they are generally wary of doing so unless there are perceived benefits of doing so (which may be in the form of encouragement to learning from board members).
  • Data collection has cost implications and thus requires some decisions upfront. We need to define who the consumers of the data are and what their interests are; we also need to determine what we want to influence and how we will do that. The challenge is in how we balance, prioritize and respond to all these data requirements at the same time.
  • There is a lot of discussion about cost. But it is important to realize that the intended benefit of defining outcomes is not necessarily that you have an accurate accounting but that you are creating accounting for  the organization by working with beneficiaries.  Engaging them properly and having a system that properly understands the needs of beneficiaries will help improve overall outcomes for all involved.

Read More: Impact Management Project Strategy - What is needed to make is successful?

Theory of Change Best Practices

The world we are moving into is one that is not accepting the notion that all good efforts lead to good impact. Although this new ideology challenges our organizations, efforts, and projects, it brings with it accountability, transparency, and reform.

If we are prepared, we can be a part of the shaping of this new era. Before moving forward, be sure to gain the trust and backing of your stakeholders. Be sure that there is collective organizational intention to take the activities seriously. You will need to work together – from the Executive Director to the program coordinators to the interns to the Board.

Fair warning, once you have completed your new impact measurement strategy and you are ready to implement it in your organization, you might find some resistance from your colleagues. This is natural; people have a natural fear of change. Breaking the status quo brings uncertainty and anxiety. Before you embark on this journey to improve your impact measurement strategy, know that it will require change…in your organization’s mindset, in your operations, maybe even in your tools and technology. But if you succeed to engage your organization in this journey, the results will be amazing.

Here are some tips to achieve the level of involvement that you require in order for your organization to succeed.

Engage stakeholders

Invite key stakeholders to be part of the preparation, especially those affected by or driving the changes, i.e. leadership, program managers, etc.

Communicate intent

Communicate your intent to implement or improve the impact measurement strategy. In the beginning, this might be done through information sessions open to anyone interested in learning more about the new impact measurement process. Remember that people are motivated by the outcome. Be sure to expose the need for change to the whole organization and clearly describe how the change will benefit each area of the organization.

Break it down

Don’t try to boil the ocean – start small. A small change is easier to control and observe the results. As you go along, small wins will motivate staff. In this case, you might go by Volumes: The Actionable Impact Management framework is already broken into 4 steps (Groundwork; Metrics; Data; Impact Report) that might serve as a reasonable guideline for your organization’s bite-sized chunks.

Identify key agent of change

Identify the early adopters within the different departments – the individuals that seem most excited about the potential change and who want to be part of it. Next, provide those individuals with training so that they are well-versed in the objectives and goals along with the methodologies and tools that will be used to apply them. Throughout the process, these are the individuals you will want to keep informed and updated. They will help keep everyone else updated as well. Be sure to listen to their feedback. All this feedback will help you make small adjustments to make the change smoother.


Recognize those making the effort to adopt the new process. Show how the benefits are starting to happen. Communicate how this new impact strategy is helping your organization, either in terms of efficiency, effectiveness or any other element that is relevant to your organization’s culture. Try to adapt the implementation process around the organic inclinations of those involved.

Invest in innovation

Well thought out technology tools can make the process a lot simpler and easy for stakeholder engagement. Using multiple tools which are not made for impact data management can be very time consuming and resource draining in long run.

Theory of Change Education

What is the problem that we are trying to solve?

If we reach out to children in Crisis and Conflict-Affected Environments by having quality programs, trained teachers, and learning materials then it improve student learning outcomes, measured by Average Student Test Score and ultimately provide quality education to all

Click Here 1For Live -Theory of Change In Education - Impact Cloud example


Theory of Change Education






Theory of Change Energy

What is the problem that we are trying to solve?

If we invest in the clean energy by increasing investment and access to the clean energy then we can achieve environmental benefits, improved health of people, and economic growth of people and ultimately we can improve quality of life of people and planet


Click Here 1To See Live Theory of Change Energy



Theory of Change Energy



Theory of Change Agriculture

What is the problem that we are trying to solve

If we Formalizes the informal farm-to-market sector by by providing a stable, fair market for horticulture crops, transporting goods using cold-storage and distributing to food buyers then it will improve productivity and incomes for smallholder farmers and informal vendors. and ultimately BUILD PROSPERITY

Click Here 1 To See Live Theory of Change Agriculture - Small Holder Farmer



Theory of Change Agriculture



Start with a theory of change driven impact measurement & management


Theory of Change Resources

Theory of Change and Logic Models Resources

Guides for identifying and linking the key results expected from an intervention: inputs, activities, outputs and outcomes.

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