As you follow along the checklist, include key assumptions that are built into your approach. Use of assumptions will help you clarify your contribution toward addressing the problem and will help you identify any additional risks you may need to manage.

Describe the problem you are trying to solve through your investment strategy or your business strategy

Consider the main problem you want to solve, and also your long term goal you want to accomplish. To aid in considering how to frame the problem consider referencing the SDGs and/or generally accepted Impact Themes.

Describe the key stakeholders you are aiming to affect through your strategy

Consider those you seek to benefit. Stakeholders - people and/or planet - are those most affected by the issues your investment strategy or business aims to address. Be as specific as possible.

Describe your entry point to creating impact for key stakeholders - people and/or planet

Consider whether your entry point is predominantly investment,  assistance and support, intellectual, or a product or service, or a combination of several ways or means. Try to focus and be very clear - this is how you will frame the way you think you can most directly contribute to creating impact.

Describe the steps needed and the assets you will allocate to address the problem and create impact

Consider key actions that you will take as part of your strategy for creating impact. Consider your expectations and those of your stakeholders. Ideally, you will consult your stakeholders or experts in the issues you are trying to address to ensure your plan is in line with the needs of your target stakeholder group(s). Try to keep these as specific and action-oriented as possible. Identify the assets  that you are prepared to allocate toward addressing the problem - these could include capital, business ideas, capacity building support, partnerships or other inputs.

Describe any limitations to your theory

Consider your constraints - these could be things outside your control or could be parameters you’ve set on how you / your organization operates. Consider the risks to achieving your strategy - risks could be that you are trying  a wholly untested idea and lack evidence to support your strategy, or you plan to operate in an unstable region, or you are relying on a variety of partners to successfully execute your plan among other things. Also, consider the timeframe in which you expect for your strategy to produce outcomes. Make sure that you are being realistic about such things as external dependencies and the magnitude of the problem and other variables that might affect your ability to deliver against your theory.

Describe the short-term and long-term change(s) you see as your goal

To specify your goal(s), first consider what the immediate results or outcomes should be. List the key near-term outcomes that your actions should lead to: these are the pre-conditions that you need to realize your goals. Next consider the long term results or outcomes you expect to happen because of your strategy.

Describe the expected measurable effects - positive and negative, near- and long- term - of your strategy

Consider which tangible results you expect use to manage against your theory of change and that you can show to others to help them understand whether or not your investment or enterprise is meeting your impact expectations. Think of these as signposts that you are on the right track or need to pivot.

  • Measurable Effect 1
    • What are the wider benefits of this strategy?
    • What are the negative effects of this strategy?
  • Measurable Effect 2
    • What are the wider benefits of this strategy?
    • What are the negative effects of this strategy?
  • Measurable Effect 3
    • What are the wider benefits of this strategy?
    • What are the negative effects of this strategy?

There are many organizations that have developed resources to help create a theory of change. Find resources that fit your needs by searching the Impact Toolkit.

Theory of Change Resources in the Impact Toolkit:
  1. New Philanthropy Capital

    Theory of Change: The Beginning of Making a Difference

  2. NEF Consulting

    Creating a Theory of Change