Theory of Change for Impact Ventures

Posted on August 3, 2020

Developing your impact model is much needed nowadays even in these uncertain times”

As a support for the entrepreneurs enrolled in Berytech’s Impact Rise Social Entrepreneurship Program and their growing need to develop their impact model, Nadine Asmar was invited to lead a theory of change workshop. Its objective was to define and align on what societal impact means, learn and understand the process of measuring impact, data collection and stakeholder mapping. It was conducted online, in an interactive, experimental and fun approach building on collective learning and international best practices.

“Each venture was able to learn, apply the theory of change on their own ventures and receive feedback. Having worked with them during the Scale up bootcamp helped to offer deeper and more tailored review of their impact models,” explains Nadine Asmar.

Systematic approach to impact measurement

During the workshop, the social entrepreneurs identified the different understanding and definitions to impact. According to Roche, ‘Impact is a significant and lasting changes in people’s lives, communities or ecosystems brought about by a given action or set of actions.’ It is the world with your involvement minus the world without your involvement.

Measuring impact is the process of analyzing, calculating and monitoring changes (positive or negative) that result from a given intervention. A systematic approach to impact measurement enables ventures to not only communicate its impact to funders, investor and beneficiaries, but also to maintain an informed understanding of what it is genuinely achieving and to be able to plan a growth strategy.

Measuring impact serves three main purposes:

  1. Measure for learning to understand performance and test assumptions
  2. Measure for action to guide behavior and communicate value
  3. Measure for accountability to report performance and build relationships

The benefits of measuring impact can be internal management improvement and external positioning improvement.

How to measure impact?

There are various methods to assess impact, which serves different purposes and different target audiences. That is why the motivation and objectives should be clear to choose the right measurement method. We chose the Theory of Change as it describes entrepreneurs intended strategy for achieving a desired change. It identifies the preconditions, interventions necessary for an impact venture’s success, explaining how early results (immediate changes) relate to more intermediate changes and then to longer term change.

Theory of change works mainly at strategic level.

  • Step 1: Determine impact goals – what is the long-term change to be achieved
  • Step 2: Develop the theory – what will be done to achieve the impact goal? The changes that may occur could be in: Learning and awareness, Welfare, Behavior, Attitudes and feelings, Skills and capabilities, Relationships, Condition
  • Step3: Validate the logic – is there confidence that the actions will lead to the desired changes?

Problem definition > Resource > Activities > Outputs > Outcomes ( – ) what would have happened anyway? (=) Impact

The Theory of Change should be:

  1. Plausible: Evidence and common sense suggest that the implementation of activities should produce the expected results, showing causes and effects between different parts of the operating model and predicting how changes in one element affect another(s);
  2. Achievable: Economic, technical, institutional and human resources are available to carry out the initiative.
  3. Verifiable: It is specific enough and complete enough to be able to assess your progress credibly and effectively.
  4. Simple: It has the necessary core elements but as few as possible.

If a solution has a simple and well-articulated theory of change, growth potential is possible as it is related to the ability to standardize the activities and core components of its operating model. In formulating the theory of change there are always underlying assumptions about how these changes will happen and certain rationales that ideally make the theory more robust. There may also be assumptions about the contextual conditions under which the solution fits in and how they may affect the desired activities and outcomes. The purpose of making these assumptions explicit is to make sure that the activities and outcomes are appropriate to influence the change in the desired direction in the context where the solution is embedded.

Before growing the solution, it must first ensure that its Theory of Change has relevance and that there are strong signs of small-scale viability and success. In other words, it must be ensured that the proposed solution meets a real need, there is demand and willing stakeholders to pay and the solution is effective.

Few tips

  • Decide on what is important. Accurately define the questions that need to be answered and be clear about what is important to achieve
  • Keep it simple. Measurement should be manageable, so don’t measure too many things at once
  • Know the limits. Select an impact measurement approach that matches the resources and the scale of the impact venture
  • Use the information that is collected. If the information is not used, it is not worth measuring

“Developing your impact model is much needed nowadays even in these uncertain times. It allows us to keep in mind our lighthouse, our vision and see how best to adapt instead of diverging away from our desired impact and stretching our resources thin,” concludes Nadine Asmar.

About the author

Nadine Asmar is a resilient entrepreneur with an international experience of more than 15 years in business strategy, organizational planning, critical thinking, business acumen and trust-based partnerships management, worked in volatile markets, different industries, on different channels of distribution, with multi-cultural teams, collaborators and partners. A founding member and managing partner of Nadal & BRD-I Group, she is also a coach, lead facilitator and mentor with Mowgli Mentoring program in the MENA region. Moreover, she helps NGOs and private companies establish themselves in Lebanon and build partnership in the region with the private and public sector.

Learn more about the Impact Rise Program here.