Focus on Your Theory of Change
Lately, a lot of voices (mine included) have been arguing for increased collaboration between nonprofits and thinking differently about organizational structure. We also see hosted workshops training folks on the mechanics of mergers and acquisitions in the nonprofit sector. With massive disruptions in federal public policy, budget shortfalls at the local and state level, and the accelerated siphoning of philanthropic dollars from the field to idle Donor Advised Funds, many nonprofits are running scared because of decreasing revenues and dwindling short-term cash reserves.
Unfortunately, missing from many of the conversations that focus on the “solutions” is the deeper exploration of the reason “why” a given nonprofit exists. Often we jump into conversations about cutting programs, downsizing staff, and hunting for merger partners, before we ask ourselves about the community impact of dismantling or reorganizing.
One nonprofit leader I recently spoke with asked me, “Where should I start this conversation with my Board of Directors?” My answer. “Focus on your theory of change.” The leader looked a little puzzled, which was not unexpected to me. In fact, back when I was a full time consultant a decade ago, I would point to the then current 2016 Northwest Nonprofit Capacity Report that offered survey results from over 1,000 nonprofits across the five northwest states. The survey results indicated that only 13-15% of nonprofits reported having a written theory of change (1). Wanting to look at more recent data, I reviewed the 2024 survey findings from the same survey source but there was no comparable data. However, in the discussion of strategic capacity, the 2024 survey identified that one of the five greatest barriers to strategy was the lack of clear vision or direction and difficulty in defining or agreeing on the long-term goals of the nonprofits (2). These data points are sobering, and explain why so many nonprofits are currently frantic, scared or paralyzed. Bluntly, if an organization does not have a clear understanding of how it creates change over the long term, decisions being made at this time of crisis are the equivalent of repairing a complex engine with incomplete understanding of how the engine works, no user manual, and a crescent wrench, hammer, and screw driver.
Recovering, the puzzled leader finally said, “well we do have a couple of logic models describing how our programs work. Is that what you’re talking about when you say the theory of change?” My answer was “sort of but not quite.”
Logic models are linear representations of programs starting with resources needed ==> program strategies ==> program outputs and finally ==> program impact (3). Logic models demonstrate the operational sequence of programs and, at times, serve as the framework for program evaluation. However, if a nonprofit has four program areas, the agency conceivably has four logic models. Each telling part of the agency story. Of course an agency with four programs may also represent all programs in a single logic model, however, even in this case, an agency’s theory of change is more than the sum of its logic models. A theory of change is a strategy document.
The Annie E. Casey Foundation has developed a series of four publications related to building Theory of Change and is a deeper dive than this article (4). My perspective is that a Theory of Change starts with a data driven definition of the need that your nonprofit addresses. At the other end of the model Is a vision of how tomorrow will be different if your nonprofit is successful at impacting the need. In between those anchors is what you do to effect change. The detail of the theory of change is how your agency’s programs connect to each other and effects the change you are working towards. Ask yourself, are our programs sequential? Additive? What is the weight of evidence supporting each of the programs in your theory of change? What is the proportional weight of different program components? A well thought out and articulated theory of change is the prerequisite to making the strategic decisions the current operating constraints we find ourselves in.
How can a board of directors make a decision about investing in or cutting a program without a solid understanding of the evidence and relative weight that is at the foundation of the nonprofit’s programs? So it is crazy that the data suggests most organizations do not have a written theory of change because it is the very decision making tool that provides context for strategy discussions. No wonder why many nonprofits lack a clear vision or direction and have difficulty defining or agreeing on long-term goals.
Without a clear understanding of how your organization creates change, the anxiety and conflict will continue. Without understanding impact, many nonprofit boards default to governance by financial control. It is time to go back to the fundamentals of how you create change because strategy and decision making must be driven by a nonprofit theory of change.
~Mark
References
(1) 2016. Northwest Nonprofit Capacity Report. page 6.
(2) 2024. Northwest Nonprofit Capacity Report. page 21.
(3) W.K. Kellogg Foundation. (2004). Logic Model Development Guide
(4) Annie E Casey Foundation. (2022, June 29). Developing a Theory of Change.
I have spent my career building connections and supporting collaborative work. I was fortunate enough to be introduced to systems thinking as part of my graduate work in public health and have used community development skills in virtually every position I have held. If you need a meeting facilitator, trainer or someone to help design a process, the reach out and connect.
