5 Benefits of a

Nonprofit Theory of Change

© 2016 Social Velocity

From An Executive Director…

“It’s so obvious to

me why peopleshould support

us.I don’t

understandwhy they

don’t get it.”

They don’t get it because you haven’t articulated your theory of change…

The Theory of Change

Community Resources Nonprofit Community

Change

What is a Theory of Change?

Target Population(s)

External Context Activities Short & Long

Term Outcomes Assumptions

What people or groups are you seeking to benefit or influence?

What relevant trends in or changes to the external environment are occurring?

How and where are your core competencies employed?

What changed conditions do you believe will result from these activities?

What evidence do you have that this theory will actually result in change?

The Theory of Change Answers

5 Key Questions…

Target Populatio

n

Tier 2 K-2nd grade

children in AISD

External Context

High school drop out

rate increasing

Activities

Provide daily,

targeted literacy

intervention

Short & Long-Term Outcomes

Students get to grade level in reading, improve

academics

Assumptions

Literacy rate at 3rd

grade predicts future

academic, life success

Like This…

ACE brings at-risk studentsto grade level in reading, resulting in:

More succeeding studentsBetter schoolsA more educated workforceA more equitable economy and community

So What?

The First Building Block

Builds Vision, Mission, Strategy

Engages Board & Staff

Helps Prove Impact

Allows Capacity Capital Attracts

More Support

Sustainable

Community Change

A Theory of Change

5 Benefits of The Theory of Change

1. Builds Vision, Mission, Strategy

2. Engages Board & Staff

3. Helps Prove Impact

4. Allows Capacity Capital 5.

Attracts More Support

Sustainable Community

Change

A Theory of Change

1. Builds Vision, Mission & Strategy

Theory of Change

Target Populatio

n

External Context

Activities Short/Long Term Outcomes

Assump-tions

What people or groups are you

seeking to benefit or influence?

What relevant

trends in or changes to the external environment

are occurring?

How and where are your core

competencies employed?

What changed

conditions do you

believe will result from

these activities?

What evidence do

you have that this

theory will actually result in change?

Relates to Mission

Relates to Vision

What is a Vision?Relates to “Short/Long Term Outcomes” of Theory of Change Describes an idealized future because of your nonprofit’s work“Every child is a successful reader before third grade, setting them on a path of excellence in school and in life.” (ACE)

“All people, even in the most remote areas of the globe, hold the power to create opportunity for themselves and others.” (Kiva)

What is a Mission?

Relates to “Activities” of Theory of ChangeDescribes your nonprofit’s day-to-day work toward the Vision“charity:water brings clean and safe drinking water to people in developing nations.”“Teach for America finds, trains and supports individuals who are committed to equality and places them in high-need classrooms across the country.”

Strategic Plan Process

Plot your nonprofit’s position in the external environment

Conduct market research to refine

Refine Vision/Mission

Create goals & objectives of strategic

planCreate budget

Opn plan

Goals & Objectives

Goal 1: XXGoal 2: XXGoal 3: XX

Goal 4: MoneyGoal 5: People & Infrastructure

Theory of

Change Goals

Organization Goals

From January 1, 2016 – December 31, 2018, we will:

2. Engages Board & Staff

Target Populatio

n

Tier Two K-2nd grade

children in AISD

External Context

High school drop out

rate increasing

Activities

Provide daily,

targeted literacy

intervention

Short & Long-Term Outcomes

Students get to grade level in reading, improve

academics

Assumptions

Literacy level at 3rd

grade predicts future

success

The Theory of Change

2016 Operational PlanGoal Objective Lead Milestone Checkpoint

(monthly, or quarterly, etc)

1. Parents 1. Marketing Strategy

Bob Written strategy

Outline by March 2016; market research by June 2016; Draft by Sept 2016; Final by Dec 2016

2. Students 1. Evaluate Data

Tom List of recommendations

List of available data Q1; Fully review data Q2; List of recommendations Q4

3. Teachers 1. Database Mary Database complete

List of fields by March 2016; database complete by Dec 2016

4. Revenue 1. Unrestricted Foundation

Phil $120K Gift range chart Jan; Prospect list Feb; Connections Mar; Meetings set Apr; Proposals June

Board

3. Helps Prove Impact

Theory of Change

Target Populatio

n

External Context

Activities Short/Long Term Outcomes

Assump-tions

What people or groups are you

seeking to benefit or influence?

What relevant

trends in or changes to the external environment

are occurring?

How and where are your core

competencies employed?

What changed

conditions do you

believe will result from

these activities?

What evidence do

you have that this

theory will actually result in change?

The impact of your programs

Then, Nonprofits Rated on...

...And Now Nonprofits Rated on…Overhead Expense Ratio

20%+ is unacceptable Financial HealthFinancial ratings tablesFundraising efficiencyWorking capital ratioRevenue & expense growthAccountability & Transparency

Independent boardAudited financialsPolicies/proceduresInformation sharingResults ReportingAlign mission and $Results logic & measuresValidatorsClient voiceEvaluations

Give based on values

Want to be engaged

Focus on impact

Pave their own way

Source: www.nextgen.org Johnson Center for Philanthropy and 21/64

Target Populatio

n

Tier 2 K-2nd grade

children in AISD

External Context

High school drop out

rate increasing

Activities

Provide daily,

targeted literacy

intervention

Short & Long-Term Outcomes

Students get to grade level in reading, improve

academics

Assumptions

Literacy rate at 3rd

grade predicts future

academic, life success

Prove Outcomes

Increased student reading levelIncreased student performance on standardized tests

Prove Outcomes

4. Allows Capacity Capital

The Starvation Cycle

Funders Demand More for

Less

Nonprofit Skimps on

Staff, Systems

Nonprofit Is Less

Effective

Fewer People Served,

Changed

RevenueOngoingSupports day-to-day BUYS services (beds for a homeless shelter)

vs. CapitalOne timeSupports infrastructureBUILDS organization (evaluation system)

Two Kinds of Money

A one-time infusion of significant money to fund:

TechnologySystemsPlanningDevelopment staffTrainingLeadership development

Capacity Capital

BeforeTutoring 800 students/yearSmall, disengaged boardLack of management expertiseLimited individual & school district dollars

Raised $60K+ in capacity capital for planning & management coaching

AfterTutoring 2,400 students (3X growth in students)Larger, more engaged boardSignificant financial commitment from school districtGrowing donor base

Nonprofit lacks infrastructure

Capacity capital strengthens the nonprofit

Nonprofit achieves more outcomes, impact

What Capacity Capital Does…

1. List Your NeedsWhat is holding your org back?

2. Add a Plan and Price TagWhat is your plan and what will it cost?

3. Identify Current Major Donors or BoardWho could be convinced of the need?

4. Make the PitchCapacity investments = more social change

Build Your Capacity Capital Pitch

5. Attracts More Support

Message Impact

The nonprofit is anintermediary

that causes community change

Donor invests in a nonprofit with shared values

Nonprofit translates that support into change

Community change occurs

Begging

“With your $100, we can house our clients tonight.” 

InvestingWith your $100, homeless adults gain…

A place to sleepAccess to tools for a job search

Which leads them to… Find jobs, housingBecome self-sufficientNo longer be a burden

As a donor, you help create…Lower social costsMore contributing citizensStronger, healthier community

Messaging Focus

Fundraiser

Mentality

Donor Mentality

Org Mentality

ROI

Donation Vs. Investment

Fundraising goals Community change

Tin cup Opportunity

What’s in it for me? Let’s change the world

Reactive

Recognition, benefits

Strategic

Social change

What are you offering?A. A new building

B. The opportunity to transform lives through state of the art research labs that will find a cure for cancer by 2040

Why should I give?C. Because our nonprofit needs money

D. Because cancer kills 7.6 million people each year and our nonprofit is leading the fight for a cure

Learn More…

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© 2016 Social Velocity

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Velocity