Recent initiatives from state and federal government agencies have helped foster the formation of community-based watershed organizations. Although there is a great deal of enthusiasm about the potential of these organizations to enhance water quality, relatively little attention has been paid to the impacts these organizations may have on the well-being of rural communities more generally. Assessments of effectiveness have typically focused on specific activities and accomplishments, rather than a broader range of community-based effects. In short, we ask whether community-based environmental management improves "community" as well as "environment". Our research utilized a mixed-methods design, including a statewide mail survey of all Pennsylvania watershed organizations, followed by in-depth interviews with 28 rural watershed organizations. This sequential approach progressively explored in more detail definitions of effectiveness, including the building of rural capacity. We find watershed organizations are potentially effective mechanisms for building local leadership, enhancing the skills of rural residents, and making valuable connections with other communities, facing similar water-resource and rural-development issues. However, the range of issues with which local watershed organizations engage and the methods they currently utilize may eventually limit their usefulness. (Contains 3 footnotes and 3 tables.)