Interrogating the Theory of Change: Evaluating Impact Investing Where it Matters Most

Jackson, E. T. (2013). Interrogating the theory of change: Evaluating impact investing where it matters most. Journal of Sustainable Finance & Investment, 3(2), 95-110: Click here to read the journal article.


Continuing to build the capacity of the impact investing field to use theory of change in its evaluation practice should be a priority in the years ahead. Theory of change can be applied productively in conjunction with a wide range of methods, such as network analysis, policy episode analysis, organisational self-assessment, contribution analysis, participatory techniques, social return on investment, RCTs, and feminist research strategies, among others. Across all combinations of methods, balancing the equally important imperatives of accountability and learning will be essential. Testing various combinations of methods with theory of change will teach practitioners what works particularly well in the unique space of impact investing, and what does not. Furthermore, creating an ongoing dialogue between the development evaluation field and the impact investing industry, and designing and launching new education and training initiatives, should be key elements in this capacity building process. Interrogating the theory of change across the field can help build an impact investing industry that is adaptive, transparent and self-sustaining. All levels of the industry can benefit from a more comprehensive application of theory of change, including specific investments, investment portfolios, individual organizations, multi-firm platforms and the industry as a whole. However, the application of this approach is especially important at the micro-level of individuals, households and communities, where the results of impact investments matter the most. And stronger micro-level performance enables impact investing to make an even more significant contribution to the macro-level search by the international community for effective innovations in development finance. Impact investing leaders should fully engage in this opportunity.


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