The theory-based evaluation approach documents the assumptions implicit in program design and points to the data required to test these assumptions. Collecting and analyzing such data through quantitative and qualitative techniques enhances understanding of the validity of the assumptions and the relevance of key program processes. This article lays out the application of a theory-based approach to the evaluation of social fund projects, with a focus on the issues of subproject sustainability and institutional development impact. It shows the processes at work especially at the community level and tests the assumptions underlying social fund subproject sustainability and institutional development impact.