Making “Theory of Change” Matter
A Guide for Funders and Nonprofits
Somewhere between the program narrative and the budget justification, it’s there—often tucked into an appendix or crammed into a single slide: the theory of change. In the nonprofit sector, it’s become a familiar artifact. A diagram. A linear flowchart. A cloud of boxes and arrows meant to suggest that someone, somewhere, has thought through how change actually happens.
But more often than not, theories of change are treated like formalities. Funders ask for them. Nonprofits deliver. Everyone nods, then moves on.
This is a missed opportunity.
A theory of change, when done well, is more than a schematic. It’s a window into the strategic thinking of an organization—how it understands the problem it's trying to solve, the levers it believes can move that problem, and the assumptions that undergird every action it takes. For funders, engaging seriously with a grantee’s theory of change isn’t just due diligence, it’s a way to deepen partnership, surface learning opportunities, and sharpen impact.
The Case for Caring
Many philanthropists are already asking bigger questions about effectiveness. They want to move from transactional funding models toward partnerships that foster trust, accountability, and co-learning. They’re looking for signals that a program is not just well-intentioned, but well-grounded.
Yet the theory of change—arguably the clearest articulation of a nonprofit’s strategy—often goes unread or unquestioned.
To be fair, some of that hesitation is earned. Theories of change can be dense, abstract, or laden with jargon. In some cases, they reflect what funders want to see rather than what the organization truly believes. But when approached thoughtfully, a theory of change offers valuable insight. It can:
Expose the logic behind an intervention.
What exactly is supposed to happen, and why?
Surface key assumptions.
What conditions need to be true for this to work? What happens if they’re not?
Clarify focus.
What’s within an organization’s control, and what isn’t? What change is realistic within their scope, and what might require broader systemic effort?
But beyond these core functions, a theory of change can also reveal something deeper: the organization’s epistemology of change—how it comes to understand whether, how, and for whom change is happening.
What Makes a Theory of Change More Impactful
If a theory of change is to be more than a grantwriting exercise, it needs to be grounded in more than internal assumptions. Funders can support—and should expect—the following:
1. Co-Creation with Communities
Too many theories of change are developed in boardrooms, far from the communities most affected by the issues at hand. Including beneficiaries, frontline staff, and community partners in the design process can bring nuance, realism, and legitimacy. Their lived experience is often the best source of insight into what change looks like and what might actually catalyze it.
2. Identifying Data Gaps
A good theory of change doesn’t just outline a chain of events; it highlights what’s known, what’s assumed, and what remains to be tested. This can reveal where data are missing or insufficient. For example, do we have credible evidence that a particular activity leads to the desired intermediate outcome? If not, that gap becomes a learning opportunity—one that savvy funders can invest in closing.
3. Explicit Attention to Context and Power
Effective theories of change do not exist in a vacuum. They acknowledge the systems, structures, and historical dynamics that shape the work. They ask: who holds power in this system? Who is excluded? What structural forces might resist the intended change—and how will those be addressed?
4. Flexibility and Re-Examination
Conditions change. So should strategy. A strong theory of change should be a living document, not a fixed artifact. Funders can encourage grantees to revisit and revise their models as they learn, and as the context evolves.
What It Looks Like to Engage
“Beyond core functions, a theory of change can also reveal something deeper: the organization’s epistemology of change—how it comes to understand whether, how, and for whom change is happening.”
At the proposal stage, funders can use theories of change to prompt deeper dialogue. Not just “Is this logical?” but “Whose voices shaped this?” and “What evidence—or absence of evidence—supports these links?”
During the life of a grant, a theory of change can guide evaluation, adaptation, and shared learning. Reviewing the theory of change annually can help identify when assumptions have held—and when they need rethinking.
Internally, funders can reflect on how their own strategies interact with those of their grantees. If multiple organizations in a portfolio are working toward similar outcomes, is there alignment in how they understand change? Are there blind spots or tensions that merit further exploration?
From Transactional to Transformational
The most effective philanthropy isn’t just generous, it’s rigorous and reflective. It moves beyond funding outputs to interrogate the pathways to impact. It asks not only what is being done, but why it is expected to work and how that logic is being tested.
A well-crafted, community-informed, and data-aware theory of change won’t guarantee success. But it can help organizations navigate complexity with more clarity, and help funders make more intentional, strategic investments in the work of social transformation.
So the next time a theory of change crosses your desk, don’t skip past it. Sit with it. Ask about it. Consider what it reveals, as well what it doesn’t. That’s not the end of the conversation. It’s where the real work begins.
If you or your organization would like help crafting a theory of change or building an impact strategy around one you already have in place, contact us here.
