Creating a Theory of Change: Everything Your Nonprofit Needs to Know

What is a Theory of Change? What purpose does it serve? Does your nonprofit really need one? How should you go about creating one?

If you’re asking questions like these, you’re not alone. Many nonprofits find themselves deeply confused about the concept of a Theory of Change, probably because there are dozens of conflicting definitions for “Theory of Change” and its components, and an unfortunate lack of clear best practices for developing and using this valuable strategic tool.

This article aims to change that. We’re offering our definition for a Theory of Change and its components, along with a suggested approach for developing a Theory of Change that we’ve tested and perfected with a range of organizations of different sizes and in different sub-sectors. We’re also dissecting an example Theory of Change that we developed in partnership with one of our clients so that you can see how a real Theory of Change works in practice. Let’s dive in.

What is a Theory of Change?

A Theory of Change is a visual definition of the broad social change an organization is looking to achieve, hand-in-hand with others in its ecosystem, and a map of all of the outcomes and activities necessary to achieve it.

A Theory of Change describes how and why a desired change can be expected to take place under certain conditions. Most nonprofits know what they do (their programs, services, and activities) and what they’re looking to achieve (their mission and vision), but few have a detailed, accurate understanding of what happens between the time someone engages with their organization and the time a specific change takes place. That’s where a Theory of Change comes in. It maps out what many refer to as the “missing middle.”

What Does a Theory of Change Include?

Theory of Change elements
Theory of Change Elements

A Theory of Change should include the following elements:

  • The Long-Term Goal
  • Outcomes (short-, mid- and long-term)
  • Activities
  • Assumptions

Let’s define each of these elements and discuss how they work together. To help illustrate each element, we’ll use the example of a nonprofit focused on mentorship for high school students.

The Long-Term Goal

In a Theory of Change, the Long-Term Goal describes the broader social change you are working to achieve, not through the work of your nonprofit alone, but alongside other organizations or players in your space. Think of this as the “final destination” in your Theory of Change.

Example: The mentorship nonprofit’s long-term goal might be “Graduating high school seniors go on to successfully complete post-secondary education.”


In a Theory of Change, Outcomes are specific, desirable results that must be achieved in order to reach the Long-Term Goal. A Theory of Change includes short-, mid- and long-term outcomes that build on one another, together creating a pathway to change. Outcomes should be measurable.

Example: To ensure graduating high school seniors go on to successfully complete post-secondary education, there are a number of short-term, mid-term and long-term outcomes that would need to be true, such as:

  • Increased academic achievement for high schools students
  • Student social-emotional well-being
  • A strong student support network during high school 
  • Free or affordable post-secondary educational options

The example list above is by no means exhaustive, but hopefully you can see that the idea is to think about all of the things that need to be achieved in order for the Long-Term Goal to be reached. We’ll discuss the differences between short-, mid- and long-term outcomes in more detail later in this post.


In a Theory of Change, Activities are the things you must do to achieve each Outcome. Activities are usually expressed with verbs (“offer,” “focus,” “provide,” “strengthen”).

A digital whiteboard with post-its. The title reads "Graduating high school seniors go on to successfully complete post-secondary education." The post-its read, "Corporate training," "1:1 support," "partnership with after school programs/athletics," "educator conference/family nights," "scholarships," "increased academic achievement," "free/affordable post-secondary educational options," "a strong student support network during high school," "engaged families and educators," "student social-emotional wellbeing," "every student has a mentor," "focus on whole-child," "access to mental health professionals," and "professional mentors embedded at high school."
A brainstorm of potential outcomes and activities


For the mentorship organization, Outcome + Activity pairings might include:

  • Outcome: Increased academic achievement for high school students
    • Activity: Provide high-quality 1:1 support/mentorship
  • Outcome: Student social-emotional well-being
    • Activity: Strengthen focus on whole-child approaches
  • Outcome: A strong student support network during high school
    • Activity: Emphasize family and educator engagement in student success (educator conferences, family nights, partnerships with athletics)
  • Outcome: Free or affordable post-secondary educational options
    • Activity: provide scholarships and corporate training programs


In a Theory of Change, Assumptions are the underlying conditions that must exist for the change you’re describing to take place. These are conditions that you are not going to work to impact directly, but that must exist for you to pursue your Long-Term Goal through a focused set of Activities and Outcomes.

Example: The mentorship organization’s Theory of Change may make assumptions like:

  • All high school students have access to high quality education during the traditional school day
  • Public policies are supportive of mentorship
  • Institutional funders continue to invest significantly in mentorship programs

These assumptions acknowledge the fact that there are many conditions that impact a student’s ability to successfully complete a post-secondary education beyond the scope of mentorship in high school, all of which can’t be addressed by one organization or group. They allow a Theory of Change to stay focused.

The Fruit Farm: A Helpful Analogy for Theory of Change Elements

Theory of Change Fruit Farm Analogy
The Theory of Change Fruit Farm Analogy

One tool we often use to help our nonprofit clients understand the elements of a Theory of Change is “The Fruit Farm” analogy. We’re not sure who originally came up with the concept, but we came across it in materials from CAFOD.

The Fruit Farm Analogy asks you to think about a Theory of Change as a fruit farm (see the image below), where money earned through fruit sales is the Long-Term Goal.

Here’s how all the other elements that make up the Theory of Change can be thought about in the context of a fruit farm.

  • The Long-Term Outcome is a mature tree that bears fruit
  • The Mid-Term Outcome is a growing treeling
  • The Short-Term Outcome is a sprouting seed
  • Activities are things like:
    • We plant seeds
    • We fertilize the sprouting seeds and protect them from predators
    • We water and care for the growing treelings
  • Assumptions are things like:
    • We planted the trees in good quality soil
    • The climate in this region stays favorable for growing fruit
    • People continue to value fruit as part of a healthy diet

Who Needs a Theory of Change?

A Theory of Change can be developed by an individual nonprofit, a group of nonprofits with similar missions/goals/areas of focus (or united through a collective impact framework), nonprofits with a networked or federated model, and more. That said, not every organization or group needs a Theory of Change. We find them to be particularly useful in these scenarios:

Individual Nonprofits

Why create a Theory of Change? You want to understand your role in the broader ecosystem.

Individual organizations can easily become insular, and begin to forget that there are things going on outside of their immediate bubble impacting the change they seek. This can result in an organization trying to do too much and accomplishing very little, duplicating the work of other organizations with related missions, or simply getting overwhelmed at the sheer scale of the problem at hand. In cases like these, developing a Theory of Change can be a powerful way to step outside of the limitations of your organization and understand how you must work hand-in-hand with others in your ecosystem to achieve your Long-Term Goal. It can also be a valuable tool for aligning board members and staff.

Groups of Nonprofits with Similar Missions/Goals/Areas of Focus

Why create a Theory of Change? You want to understand how you can better work together.

Since a Theory of Change addresses the role of more than just one organization in driving a desired change, it can be especially powerful for a group of similar organizations to work hand-in-hand to develop a shared Theory. This seems like an obvious fit for organizations working under a collective impact framework, but let’s not stop there. There is no reason why a group of organizations with similar aims but no formal affiliation can’t come together to develop a shared Theory of Change. The process is a great way to define how each of your organizations supports and strengthens the others in service of the same shared Long-Term Goal.

Nonprofits With Federated or Networked Models

Why create a Theory of Change? You want to understand the role of the national office versus the role of affiliates and others in the ecosystem in driving a desired change.

Most federated or networked nonprofits find great value in developing a Theory of Change because it’s a useful tool for overcoming challenges with role confusion. A Theory of Change helps federated organizations understand how the national office, affiliated organizations, and others in the ecosystem all work together to drive toward the same Long-Term Goal, and how their roles are distinguished from one another.

How Do I Create a Theory of Change?

Theory of Change development is an iterative process that should include a lot of collaboration and heavy input from the people who will be impacted by your Theory’s Long-Term Goal. While the exact process should be tailored to an organization’s specific needs and stakeholder accessibility, here are a few key steps you should be sure to build in.

Theory of Change Creation Step 1: Align Around Definitions and Purpose and Conduct Research

As we previously discussed, there are a lot of conflicting definitions for a Theory of Change and its related elements (like Outcomes, Activities, etc.). That’s why it’s critical to start by aligning the group that will develop the Theory of Change around common definitions for each element and ensuring everyone is on the same page. If you don’t agree with the definitions we share here, feel free to find others or create your own. The important thing is making sure everyone is working with a common framework and understanding.

It’s also important to come to an agreement about the purpose your Theory of Change will serve. We outlined some potential purposes for different sorts of groups in the previous section, but that list is not exhaustive. We suggest developing an internal “purpose statement” for your Theory of Change before you get to work. We also recommend making sure everyone in your group understands the difference between a Theory of Change and a Logic Model.

Finally, as you build a solid foundation for your Theory of Change, you’ll likely want to conduct research. Do others in your ecosystem have their own Theory of Change you can study? Is there existing scholarly or practical research you can dig into? The more insights you can find on existing approaches for pursuing the change you seek, the better.

Theory of Change Creation Step 2: Consider and Involve Diverse Stakeholders

This step should come as no surprise to those familiar with our Shared Power StrategyTM philosophy. We’re big advocates for including a diverse range of stakeholders in the process of developing a Theory of Change. This means more than just your board and staff; you should also consider the best way to include program participants, donors, funders, community members, and most importantly, those who stand to benefit from the achievement of your Long-Term Goal.

Theory of Change Creation Step 3: Identify Your Long-Term Goal

In Theory of Change creation, we like to work backward, which means we begin by identifying the Long-Term Goal we seek. Here, it’s important to take off your hat as a member of your individual organization and remember that the Long-Term Goal describes the social change you are working to achieve alongside others in your ecosystem. With the group responsible for developing the Theory of Change, brainstorm as many potential Long-Term Goals as you can think of. Then, categorize them into similar themes and narrow them down into well articulated goal statements. Ideally, these should be tested through feedback from a variety of stakeholders, most importantly people who stand to benefit from the achievement of the Long-Term Goal.

Theory of Change Creation Step 4: Ask “What Conditions Must be in Place to Achieve our Long-Term Goal?”

In this next step, ask your group this open-ended question. You’re trying to get them to surface as many things as they can that must be true in order to achieve the Long-Term Goal. At this phase, you shouldn’t be worried about whether something is an Outcome, Activity, or Assumption . Just get it all on the table.

Theory of Change Creation Step 5: Categorize the Conditions from Step 4

Now, it’s time to put things in their proper categories. Group similar conditions together around shared themes, and then discuss with your group whether a condition is best understood as an Outcome, Activity, or Assumption, given the definitions above. This may raise some healthy debate, and may also cause you to discard some ideas of conditions that no longer seem relevant to the Long-Term Goal.

Theory of Change Creation Step 6: Map Pathways

Theory of Change Pathway Mapping Example
Theory of Change Pathway Mapping Example

Next, it’s time to develop a shared understanding of the order in which specific activities lead to specific outcomes, and the order in which those outcomes lead to your Long-Term Goal. Ask your group: what must be true first, second and third to reach our Long-Term Goal? Then, experiment with moving items around from Short-Term Outcomes to Mid- or Long-Term. Once you feel you have your Outcomes in the proper order to serve as a pathway to your Long-Term Goal, aim to layer in Activities where they make sense in order to serve as stepping stones from one level of Outcomes to the next. Again, this will require a great deal of experimentation, discussion and debate. Make sure to have sticky notes and whiteboards handy, and spend some time deeply evaluating and testing potential pathways against one another.

Theory of Change Creation Step 7: Evaluate Assumptions

At this point, you’ll probably already have a working understanding of the Assumptions that need to underpin your Theory of Change. But now, with your Outcomes and Activities in the proper positions, it’s time to evaluate Assumptions more deeply. Ask your group: “what other underlying conditions would need to be true for these activities and outcomes to be able to successfully work together to achieve our Long-Term Goal?” Brainstorm as many as you can, and then summarize the most relevant assumptions.

Theory of Change Creation Step 8: Draft a Visual Theory of Change

Now, you’re finally ready to put your Theory of Change down on paper. A Theory of Change is best represented graphically, where those digesting it can see the relationship between the elements and how they layer onto one another. Whether you sketch out your Theory of Change or get it professionally designed, take the time to make it visual at this stage, before you get additional feedback. Below are some examples.

Example Theory of Change for Nurse-Family Partnership
Example Theory of Change for Nurse-Family Partnership
Example Theory of Change for First Graduate
Example Theory of Change for First Graduate
Example Theory of Change from Fiver Children's Foundation
Example Theory of Change from Fiver Children’s Foundation

You may also want to write a narrative that outlines or explains your Theory of Change. This tends to be particularly useful if your visual Theory of Change is not meant to be read in typical top-to-bottom, left-to-right fashion, as with the Horizons National example below.

Theory of Change Creation Step 9: Test Your Theory of Change

Does your Theory of Change actually make sense and hold up against scrutiny from those it will impact? The best way to find out is to run it by your stakeholders through focus groups or listening sessions. CAFOD also suggests pressure testing your Theory of Change with the following questions, which you can talk through with the group initially responsible for the Theory of Change:

  • Why did we think that ‘x’ will lead to ‘y’? What makes us think that?
  • What might hinder this from happening (e.g. costs, opposing views, lack of trust/capacity/technology, people losing assets, etc)?
  • What are the gaps in our ToC? Are there any missing links (that we can influence)?
  • Who else might need to be involved? Who else can we connect with who can aid in our progress towards our desired impact? Looking at the pathways again, are there better ways of getting to our goal?
  • Are there things we are not sure or confident about?
  • What if the assumptions don’t hold true?
  • Have we clearly identified what is and is not in our control?

Theory of Change Creation Step 10: Refine Your Theory of Change

Finally, and perhaps most importantly, refine your Theory of Change based on what you learn from your stakeholders and the evolution of your work. This should not be a one-time process, but rather ongoing. Your group should measure its outcomes on a regular cadence and then revisit its Theory of Change at least every 3-5 years to ensure it still holds true as conditions change, new players emerge in your ecosystem and more.

A Theory of Change Example: Horizons National

Horizons National is a nonprofit that supports a network of tuition-free out-of-school programs that serve children from communities deeply impacted by educational inequity. In order to clarify their impact and align stakeholders around shared goals and outcomes, they embarked on the development of a Theory of Change. Prosper Strategies support them in this work. Take a look, and then let’s dissect each of its elements.

Horizons National Theory of Change
Horizons National Theory of Change

Horizons National started by centering on the Long-Term Goal they were setting out to achieve. They spent several work sessions brainstorming and discussing their Long-Term Goal. And, they even started to brainstorm some Outcomes prior to finalizing their it, just to ensure they were centering on the right thing (for example, the team had a healthy debate about what their Long-Term Outcome should be versus their Long-Term Goal).

You’ll notice that the Long-Term Goal does not mention Horizons programs, but rather educational opportunities outside of school as a whole. That’s because Horizons National is (correctly) focused on the broader change they can drive alongside others in their ecosystem, not as one standalone organization.

Long-Term Goal: More youth succeed as a result of participating in high-quality, holistic educational opportunities outside of school.

With their Long-Term Goal in place, Horizons National then went through all the things that would need to be true in the short-, mid- and long-term in order for this goal to be achieved. They brainstormed as many things as they could think of that would lead to more students succeeding as a result of participating in high-quality OST. Then, they went through and categorized these things as Outcomes, Activities or Assumptions. Finally, they took everything categorized as an Outcome and used post-its to think through the order of which needed to come first, second, third and so on.


  • Short-Term Outcomes: Ecosystem is supportive of high-quality student-centered OST
    • There is a common definition of high-quality, holistic OST
    • The OST workforce to adequately trained and representative of communities served
    • There are supportive policies in place for high-quality OST
    • There is increased and stable funding available for OST
  • Mid-Term: Students and families participate and are engaged in high quality OST
    • There are new high-quality programs and providers
    • Existing high-quality providers have grown or replicated
  • Long-Term: High-quality OST is accessible to more students
    • OST programs play an essential role in advancing educational equity

With their Outcomes pathway mapped, Horizons National revisited their Activities and continued to build on their initial brainstorm before narrowing them down to those most supportive of each Activity. See the Activities associated with each Outcome below.


  • There is a common definition of high-quality, holistic OST. To reach this outcome, they determined the sector would need to:
    • Align on a shared vision, mission, and goals
    • Expand research and evidence base 
    • Employ quality assurance
  • The OST workforce is adequately trained and representative of communities served. To reach this outcome, the sector would need to:
    • Invest in educators and human capital
    • Advance our equity, diversity, and inclusion practices
    • Provide relevant, accessible professional development
  • There are supportive policies in place for high-quality OST. To reach this outcome, the sector would need to advocate for local, state, and federal guidelines as a sector.
  • There is increased and stable funding available for OST. To reach this outcome, the sector would need to increase awareness about the importance of high-quality OST.
  • Students and families participate and are engaged in high-quality OST. This requires the sector to create partnerships and foster strong relationships between students, program staff, peers, schools, families, and communities.
  • There are new high-quality programs and providers and existing high-quality providers will need to grow or replicate. To reach these outcomes, the sector would need to research, develop and test new, high-quality OST models and increase awareness about the fact these programs exists. More data transparency and data-sharing would need to exist, and they’d need to commit to continuous learning, so programs remain high-quality and student centered.
  • Collectively, these activities would lead to the Long-Term Outcome of increased accessibility of OST. And, across all Activities, they noted it would be critical that stakeholders, who are representative of the communities Horizons and others like Horizons exist to serve, are engaged in informing and influencing these Outcomes at each step of the way.

Finally, they centered on Assumptions made throughout the process, which you can see following.


The assumptions the team had include:

  • Out-of-school time (OST) programs like Horizons are valuable
  • More high-quality options are needed to improve students’ overall educational experience and post-secondary outcomes
  • Out-of-school time programs are one of many factors that contribute to a student’s success, and each student and family determines their own definition of success

Horizons National went on to determine how they would track and measure progress toward their Theory of Change and Long-Term Goal, using student success metrics, enrollment and retention rates and funding goals.

Horizons National also chose to include their mission and vision statements on the depiction of their Theory of Change. The mission is noted at the bottom and the vision is at the top. The Theory of Change is intended to show how the two are bridged by their day-to-day work in collaboration with others in the ecosystem.

To accompany their visual Theory of Change, Horizons National also wrote a narrative overview to provide clarity.

Related Resources

We hope you’ve found this to be a helpful resource that can guide your organization as you get to work on your Theory of Change. Take a look at other related resources below, and don’t hesitate to reach out with questions. If you have a Theory of Change you’re proud of or struggling with, we’d love to see it.