How do we know that a donation made to a charity is effective? We can total up the funds raised by a civil society group, but this measure misses if, and how well, the money translates into public good. Water pollution in the United States is still a problem, despite the 1972 Clean Water Act. Grant and Langpap examined the accounts of more than 2000 nonprofit groups working on watershed restoration in the United States from 1996 to 2008. The presence, number, and relative wealth of watershed groups was associated with improved dissolved oxygen in the water, as well as increased fishing and swimming amenities. Nonprofit groups tend to be local and often highly knowledgeable, and their presence also influences other watershed stakeholders to comply with governmental regulations. This analysis points to nonprofit organizations as an effective mechanism for helping to resolve large-scale collective action problems.
Proc. Natl. Acad. Sci. U.S.A. 10.1073/pnas.1805336115 (2018).