As part of our work in supporting creative businesses to become impact investment ready, we are working with the arts sector to define and measure the significant social and cultural impact of the Australian creative industries. This includes research and advocacy, as well as capability building programs to assist organisations in developing a Theory of Change, such as the Creative Industries Impact Lab.

What is a ‘Theory of Change’?

A Theory of Change is a valuable tool to record what purpose-driven teams often know intuitively about their impact but don’t always write down or formalise. This logic model, typically presented as a diagram, makes clear the changes an organisation or project expects to make (the outcomes) and explains how they intend to make them (activities), as well as laying out the different inputs (resources) and outputs involved along the way.

A Theory of Change provides a starting point for data collection and evaluation and, while it may not be essential when applying for investment, it is likely to give an organisation impact credibility. Investors will be interested to see what impacts have been achieved to date and how they were measured, and which tools such as monitoring and evaluation frameworks were used.

Crucially, an impact investor will want to understand how their investment specifically will help grow or improve impact. Increased impact may mean different things, such as reaching more people, working with new service user groups, expanding geographic reach, strengthening delivery approaches, or offering a greater breadth or depth of services.