How to measure impact using the Theory of Change 

Impact is a term that has rapidly gained prominence in the business world in recent years. It is typically used to describe the positive social or environmental effects of an organization’s activities, products, or services. Impact is also associated with new forms of investing and venture creation, such as impact investing or social entrepreneurship that aim to generate social or environmental benefits alongside financial returns. 

But what does impact really mean? And why should it matter to corporate managers, boards of directors, and business leaders? Here we explore these questions and argue that impact considerations deserve to be on an equal footing with financial and strategic decision-making. 

We start with a simple observation: all organizations have economic, social, and environmental impacts. However, this alone is not enough to justify the creation of new categories such as impact investing or social entrepreneurship. The central question facing the impact…