What does it take to build an impact-driven organisation? In this blog, I get back to basics to hear from leaders working on the ground to respond to local needs and challenges. Speaking to leaders of established small and medium sized charities, social enterprises, and community-based organisations in Sussex, we explored the individual as a leader, including what drives them and their organisations on the journey to achieve their purpose. These smaller organisations, less fixed in their structures and systems, reveal insights about their successes and failures, what differentiates their organisations, how they learn and improve, and how they account externally for their impact, in order to work towards the possibility of positive impact in the world.

As societal challenges grow, and government resources decline, there is increasing focus on the role of non-government and private sector organisations to tackle a wide range of social and environmental issues. At the same time there is a growing concern with ‘green-washing’ and ‘impact-washing’ — organisations seeking to gain commercial advantage by promoting their supposed ethical credentials. The charity sector is also under scrutiny in relation to the quality of its work and the value of services provided through donations.

As leaders of impact-led organisations, our mission is clear: to make a positive difference in the world. Yet, amidst the whirlwind of running an organisation, it’s easy to lose sight of what truly drives impact.

That’s where a Theory of Change comes in. At its core, a Theory of Change is not just a fancy term or another document to give to your funders or investors. It’s a dynamic framework that helps you understand how your actions drive your desired outcomes. It’s about clarity, strategy, operations, quality, improving and ultimately, making a tangible difference in the lives of those you serve.

So, why should you care about developing a Theory of Change for your organisation?

“From day one, I was in debt. Two years on — I’m still behind on my payments, and really struggling to find my feet with my finances.”

This is what I heard when talking to a tenant of a housing association. Taking up a new tenancy had thrown him into unmanageable levels of debt — a direct and unintended consequence of one social enterprise’s failure to see the big picture.

People who work on financial inclusion often make assumptions about customers and what drives their choice and use of financial services. But do we know how customers feel about their ability to engage and use these services? CGAP is seeking to answer this question and test out some initial ideas as it explores the concept of empowerment and the role it can play in building customer trust and confidence.

"We will never be a leader in client service" a senior AMK manager told me. Indeed in the competitive Cambodian microfinance market many clients might choose another microfinance institution over AMK as its loan disbursement is slower and more time-consuming for clients and its loan sizes are smaller.  Coming from an organisation that is proudly client focused, this struck me as strange.