Impact strategy: theory of change guide and template

Impact strategy: theory of change guide and template

By Arts & Culture Finance


A theory of change (also known as a logic model) is the backbone for the strategy of any organisation. A comprehensive guide and template by Arts & Culture Finance by nesta.

A theory of change (also known as a logic model) is the backbone for the impact strategy of any organisation. However, our experience has shown that robust theories of change are uncommon in the sector. As part of our mandate to improve the impact evidence base for arts and cultural organisations, we believe that helping them develop robust theories of change is a good place to start.

What exactly is a theory of change? Essentially, it is a logic model that makes clear the changes your organisation or project expects to make (the outcomes) and explains how you intend to make them (activities). It is often presented as a flow chart or diagram for simplicity, and should also include the inputs and outputs involved along the way.

A theory of change’s outcomes typically concern the changes that are expected in the beneficiary (usually an individual or community) as a result of an activity or intervention. Some impact areas that we have seen arts and cultural organisations work in are, for instance, around education and training, health and well-being or social inclusion and community cohesion. Within this, organisations can articulate outcomes specific to their work, for instance improving participants’ self-perception and confidence as learners or increasing their physical fitness and coordination. For a more structured overview of outcome areas and examples of specific outcomes, take a look at this Outcomes Matrix by Good Finance.

Charities and social enterprises use theories of change to provide a rationale for the causality of the outcomes they hope to achieve. What is really important is that they should make clear the assumptions involved between any activity and supposed outcome, and reference any evidence or (academic) research, where either is available. This adds to the credibility of the theory because it differentiates between a hypothetical causal chain and a more established one. This forms the basis of claims about attribution with respect to the causes of a particular (positive) effect.

In the above example flow chart, there is an assumption that creative writing workshops lead to outcomes such as a greater interest in literature amongst young people. Finding evidence that demonstrates this would make the theory of change stronger. However, this comes after the task at hand – breaking down the causal chain into discrete steps and drawing attention to its limits, to what is known and what is not.

Developing a theory of change gives intellectual integrity to work. To go further, we would argue that in a complex world of precious resources, positive social change makers have an obligation to interrogate the assumptions underpinning their work and understand the cause and effect links at play. This is because their efforts need to be optimised and potential externalities, both positive and negative, anticipated.

Not only this, but a theory of change contributes to the credibility of an organisation, particularly for funders and perhaps even more so for social impact investors. A theory of change demonstrates to us an organisation’s capacity and propensity for strategic critical thinking and can tell us exactly what outcomes it aims to achieve and how it plans to get there, which is important for us as investors that aim to be specific about the impact we seek to create.

Finally, it is important to acknowledge the limitations of theory of change as a concept. In reality, the drivers behind social change are complex and non-linear, so any linear logic model will be inherently limited in its representation of how change happens. In this sense, the process of developing a theory of change – deciding how you will measure longer term success and considering the extent to which you can be confident that your intervention will lead to the outcomes you want to see – is more more important than coming up with a diagram itself.

Download guide and template to a theory of change 

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Resource type: Guide/tools | Published: 2023