In this article, the authors explain what a theory of change for funders means, and which type of theory of change is appropriate to use as a funder. The authors believe that more funders should consider developing a theory of change to work through the difference they want to make. This could help them assess whether they are working as well as they could be, and understand how to improve.

Growing numbers of charities are using theory of change as a strategy and evaluation tool. This popularity is partly a symptom of funders asking charities to provide a theory of change in their application or evaluation. But can the approach also be useful for funders themselves; and how does the tool differ in this setting?

Most funders do not have a thoroughly worked out theory of change. Many are not very strategic and have not always thought through their assumptions about how they think impact happens. Many funders have broader aims than a charity does, making a theory of change more difficult to do. This lack of a theory of change can lead to missed opportunities in the charity sector: things are not joined up, and crucial elements of what makes change happen are not funded.