The section on the purpose of impact addressed the importance of impact investing and the range of opportunities available to impact investment. This section gets more granular, looking at how to build an investment thesis and how then to develop strategies to implement that thesis. It then moves on to look at some of the criteria and indicators that might be built into that thesis in order to test the strategy and how to build and manage impact portfolios.

How to use these resources

As well as drawing on the knowledge contained in the section on purpose, this section also relies on concepts covered in the section on impact measurement, management and reporting, such as theories of change. If you have not already done so, it would be helpful to read the content in those sections first.


Development and interpretation of impact thesis

Guide for Impact Investing Fund Managers: Creating an investment and impact thesis (opens new window)

Global Impact Investing Network

Reading time: 7 minutes

A concise summary of questions an aspiring fund manager should consider when developing an investment thesis. It covers everything from marketing to measuring impact. There are also links to specific resources for different asset classes and regions that a fund focuses on.

What the reviewer found helpful: “There are some great resources here for first-time fund managers and startup funds.” Eilidh Anderson

Theory of change: steering tool for effective impact investing (opens new window)


Reading time: 3 minutes

This article is a summary of BrightTALK’s webinar on the Theory of Change framework. The article gives a high-level overview of the key components of a Theory of Change and its role in illustrating the process from impact goals to measurable impact results. Emphasis is given to the potential to use a Theory of Change framework in effectively measuring and managing impact investing.

What the reviewer found helpful: “A useful introduction to the Theory of Change and its use in impact investing”   Yinni Hu


New Philanthropy Capital

Reading time: 7 minutes

Provides a helpful background on where and when theory of change should be used, as well as suggested approaches and what to consider before starting to create a theory of change. It sets out ten clear steps to follow/things to consider when creating a theory of change. It also includes a glossary of theory of change terms and their definitions.

What the reviewer found helpful: “Clearly explains what a theory of change is, when you might use it and how to create one.” Mhairi Littlewood


Impact investing goals

Impact Investing Handbook (Chapter 3, pp 57-85) (opens new window)

Rockefeller Philanthropy Advisors

Reading time: 40 minutes

The report encourages separating the ‘why’ from your investment and impact goals and explains in detail how to develop a theory of change, the underlying components involved and their limits. It discusses aligning Impact Intention and Impact Measurement and Management and the support available to investees, investors and intermediaries. The report also highlights the difference between setting impact themes (i.e. climate change) versus lenses (i.e. investing with a gender lens).

What the reviewer found helpful: “The chapter ends with a practitioner exercise and example which is a great way of putting the reading into practice” Eilidh Anderson


Impact criteria, indicators and data

Impact Investing Handbook (Chapter 3, pp 79-81 (opens new window)

Rockefeller Philanthropy Advisors

Reading time: 5 minutes

This section gives a high-level explanation of how an investor’s theory of change can inform the design of their impact portfolio, be translated into impact criteria, and be integrated into the impact due diligence process. The Impact Management Project’s 5 dimensions of impact are suggested as a helpful framework when creating due diligence processes and performing post-investment impact monitoring and reporting.

What the reviewer found helpful: “A useful starting point for learning more about post-investment impact management”   Yinni Hu

Five dimensions of impact (opens new window)

Impact Management Project

Reading time: 2 minutes

Explains the five dimensions to consider when measuring impact including: what, who, how much, contribution and risk. It sets out the impact questions to answer under each dimension.

What the reviewer found helpful: “Helpfully splits out bits of impact measurement into five categories and explains clearly what each of these covers”. Mhairi Littlewood

Developing Indicators (opens new window)

Center for Theory of Change

Reading time: 2 minutes

This is a short summary on using indicators to focus on how to measure the implementation and effectiveness of the initiative. Each indicator has four parts: population, target, threshold and timeline.

What the reviewer found helpful: “The summary contains helpful examples of different indicators and how to measure them” Eilidh Anderson


Investment decision-making processes based on impact analysis

Risk, return and Impact:Understanding diversification and performance within an impact investing portfolio (opens new window)

Impact Assets

Reading time: 25 minutes

This paper considers the concepts of risk, return and impact within the context of impact investing, and presents a range of key considerations for investors when constructing an impact portfolio. The paper also explores the concept of the “New Efficient Frontier” – a three-dimensional framework within which to assess the performance of impact investments. Some deeply entrenched biases are addressed, and useful background is provided about both impact investing and about traditional risk and return management.

What the reviewer found helpful: “An accessible yet insightful paper that looks at the traditional concepts of risk and return through the lens of impact investing.”   Yinni Hu

A portfolio approach for impact investment (opens new window)

World Economic Forum

Reading time: 10 minutes

This report offers a practical guide to building, analysing and managing portfolios of impact investments for professional investors. It discusses the friction between impact and returns and the difference in process between public and private markets (I.e. diversification).

What the reviewer found helpful: It is set out in bite-sized chunks with helpful diagrams which provide a framework and help walk through things to consider.” Mhairi Littlewood