The impact plan sets out what the social purpose organisation is about, what it is doing, and what it is hoping to achieve. By making these things clear, it becomes possible to address what the potential impacts are. The impact plan also provides a critical future reference point from which to assess subsequent performance, and determine whether or not what the organisation is doing is really working: i.e. are strategies proving effective, and are results in line with the initial aims?
The central line that runs through the impact plan is the well-known impact chain, which connects an organisation, via its activities, to its outputs, outcomes and impact:
However, far from operating a closed, linear system, social purpose organisations respond to and work within a context. As with any social context, complex networks of relationships and interdependencies predominate, serving to knit the impact chain into its surrounding fabric. The actual impact is the real change to this context, and so to gain a more complete picture of what the organisation is achieving requires also a sense of the context — both before and after the intervention — and of the further processes and conditions through which the change is really taking place.
Filling these in around the impact chain establishes the essential components of an impact plan. Prominent among them are the conditions for change — i.e. those surrounding factors that need to be present for the organisation’s outputs (typically the delivery of services or products) to transition successfully into beneficiary outcomes (change in people’s lives). The movement from outcomes into impact then takes into account the context of change — i.e. the adjustments that need to be made to the observed change to correct for issues of deadweight, displacement, attribution, drop off and unintended consequences. The impact plan also sets out the measurement system that will be used to track and evidence the impact.
The plan sets out a vision for the future — of what the organisation will do, and the effects and impact this will have. As such, it is in essence proposing a theory. It is a theory of change.
An organisation’s impact plan is to a significant extent also its business plan, as it essentially describes what the organisation is proposing to do with itself. However, while business plans (and their analysis) focus on financial projections, the impact plan addresses the organisation’s social projections. As much as with the business plan, the investor will want to inspect the impact plan in some detail. This involves working through the various components within the plan, and ensuring there is appropriate and satisfactory information regarding the key points presented by each one.
The subsequent assessment of impact risk is based on an assessment of the validity of the impact plan, while assessment of impact generation is based on the proposed results of the impact plan (assuming that it works out).
An investee organisation may not have a fully conceived, developed and complete impact plan ready to present to an investor upon request, and an important part of getting to know the organisation, and of the impact analysis procedure, may be to go through the impact plan with the organisation, and work on those areas in need of greater definition. This can be of significant value not only to the investor, but also to the organisation. The essential impact plan structure is widely used throughout the social purpose sector, making it a highly compatible tool for use by the organisation when communicating its impact (e.g. to funders, other investors, and when bidding for contracts). It also represents recognised best practice for the organisation’s own internal clarity, and for carrying out effective impact-driven management.
A diagram showing the essential components of the impact plan and the structure by which they fit together, as well as detailed descriptions of these components, is given in the impact plan section.