Theory of Change (OD6350)

This metric is intended to capture the organization’s theory of change. A theory of change (also referred to as a Theory of Value Creation or Logic Model) expresses the sequence of cause-and-effect actions or occurrences by which organizational and financial resources are hypothesized to convert into the desired social and environmental results. It provides a conceptual roadmap for how an organization expects to achieve its intended impact. Often displayed in a diagram, many theories of change can be expressed as a series of if–then statements, specifying what the organization does and the expected results of each activity. A framework built around the concepts of activities, inputs, outputs, outcomes, and impacts is called a Logic Model or Impact Value Chain. Organizations can refer to the glossary for additional information and resources.

Wherever possible, organizations’ theories of change should refer to relevant IRIS metrics.

Organizations are encouraged to footnote information on the defined outcomes they seek to achieve for their targeted stakeholders (e.g., clients, employees, distributors, suppliers, and/or the environment). Defined outcomes include specific targets that can be measured. Many are based on existing literature. Organizations are encouraged to footnote information on the evidence base that substantiates the logic chain linking outputs to defined outcomes. This evidence base might include credible secondary research, randomized control trials (RCT), longitudinal studies, primary research (such as customer surveys or stakeholder feedback forums), and qualitative interviews or case studies.

For example, an organization that provides training to and sources from smallholder farmers might only report on the number of farmers trained (Individuals Trained: Total [PI2998]), the number of smallholder farmers sourced from (Supplier Individuals: Smallholder [PI9991]), and the total payments made to those farmers (Payments to Supplier Individuals: Smallholder [PI7852]). However, its theory of change might describe how these outputs lead to outcomes, such as helping farmers build larger and more productive farms, and impacts, such as improved livelihoods, pointing to external research that supports this connection.