Social enterprises face numerous challenges.
The need to demonstrate profitability while achieving social and environmental impact creates a single most complex task for organizations. Measuring profitability is a simple and straightforward process determined through financial statements.
Enterprises, however, struggle with displaying their role as social change agents. The social return on investment is frequently portrayed as anecdotal evidence, “We distributed 1000 solar lanterns”, which demonstrates the action taken, yet doesn’t highlight the change in behavior of the situation of the community as a result of the action.
The Theory of Change model is an emerging methodology that non-profits, governments and socially minded organizations are undertaking to map out intended social and environmental changes that these institutions wish to achieve.
Theory of Change in simple terms is a roadmap that outlines how to create social change.
The process utilizes a backwards-mapping approach outlining the long-term goal to create a desired change. Identifying the intermediate and short-term goals to create a pathway of change follows this.
Defining the approach, the vision for change and the expected results outlines a framework for the multiple pathways available to achieve impact, influence policy and leverage opportunities to achieve the social change.
This is a highly participatory and iterative process involving multiple stakeholders from senior management to field teams. The framework is ultimately drawn into a wiring frame (a type of a flow chart), or a systems map for a more complex Theory of Change that involves multiple stakeholders and actors.
The process of developing a Theory of Change begins with elaborating the intended impact the organization seeks to achieve. This SMART goal should address the following questions:
Once this long-term goal is outlined, the necessary conditions to achieve it need to be highlighted. For long-term conditions to prevail, some intermediate and short-term conditions will also need to be established. The conditions can be a mixture of policy, mindset, economic, social and environmental factors that would lead to the desired change or outcome.
Activities and strategies would need to be undertaken to achieve these conditions creating a logical and chronological flow in the process. Budgets, staff, skills, systems and tools can be assigned to these activities to create clarity of needs at each stage.
The causal linkage of interventions, conditions and outcomes create a pathway that is drawn into a Theory of Change. At each stage of this outcome pathway, relevant indicators can be established to measure success. These metrics ultimately serve to measure the organizations social return on investment that has been established through the Theory of Change.
There a many great resources for social enterprise working to develop their Theory of Change. One useful resource is the book, “Start Up and Change the World, Guide for Young Social Entrepreneurs”. In this guide for social entrepreneurs, S. Dev Appanah and Shrestha Sunit give examples of how to develop the Theory of Change for an enterprise. As we have mentioned they reiterate that the Theory of Change is a way of thinking of how the outcomes of your activities will ultimately lead to a desired social impact.
An example of a Theory of Change highlighted in the book is expounded below:
If urban informal settlement communities can sell their low cost fast moving consumer goods in community kiosks, then there will be economic development in the urban informal settlement.
In the simplest terms it is an algorithm of If (condition) then (change) as S. Dev Appanah and Shrestha so succinctly put it.
Our belief is that the theory of change sets the direction for organizations and is a cornerstone to the success or failure of social enterprises. This is why it is critical to test the assumptions of if- then and build a proven theory of change.
is an Impact Catalyst at Converge in Kenya who partner with organizations that drive social and environmental impact, to tackle complex problems using data analytics, capacity building and strategy development to create solution-oriented systems and mindsets. Converge works with startups, social enterprises and non-profits to scale impact, primes institutions to be certification and investment ready, and advises on the right funding path for growth opportunities.
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is a Social Innovation Consultant and Entrepreneur who has previously worked with organisations such as Amani Institute, Ashoka, Acumen, AIESEC ,Potencia Ventures in Europe, Latin America, Africa and Asia
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