NEIGHBORHOOD-BASED REHABILITATION PROGRAMS ARE PREFERABLE TO INSTITUTIONALIZED TREATMENT, SINCE THE LOCUS OF OPERATION IS THE FAMILIAR SETTING OF DAILY LIFE. THE CHICAGO AREA PROJECT COMBINES TWO THEORIES AND PRACTICES OF COMMUNITY ORGANIZATION. ON A CITY-WIDE BASIS, COALITIONS OF SPECIAL INTEREST GROUPS FOCUS ON BROAD SOCIAL, ECONOMIC, AND POLITICAL PROBLEMS AND PRACTICE A STRATEGY OF POWER CONFLICT. ON THE NEIGHBORHOOD LEVEL, LOCAL GROUPS FOSTER A SPIRIT OF COOPERATION, CONSENSUS, AND INDIVIDUAL GROWTH. THE KEY TO SUCCESS OF NEIGHBORHOOD YOUTH WELFARE WORK IS THE GOVERNMENT ORGANZER'S ABILITY TO RECRUIT GRASS ROOTS LEADERSHIP, ESTABLISH RAPPORT WITH LOCAL INSTITUTIONS, AND UTILIZE LOCAL FACILITIES. FUNDRAISING METHODS ARE OUTLINED, AND DIFFERENT APPROACHES TO COMMUNITY CAMPAIGNS DESCRIBED. IN DISTRICTS WHERE LOCAL RESIDENTS MADE SYSTEMATIC EFFORTS TO INCORPORATE DELINQUENTS AND PAROLEES INTO THEIR ORGANIZATIONS AND ACTIVITIES, REHABILITATION WAS OFTEN SUCCESSFUL. THE EXPERIENCES OF TWO YOUNG MEN ARE INCLUDED AS ILLUSTRATIONS OF THIS POINT. THE INDIVIDUAL HISTORIES OF CHICAGO'S COMMUNITY ORGANIZATIONS ARE RECOUNTED NEIGHBORHOOD BY NEIGHBORHOOD, COVERING 40 YEARS SINCE THE FIRST COMMUNITY YOUTH WELFARE GROUPS WERE ORGANIZED BY CLIFFORD SHAW. THE PERSONAL HISTORY OF A DELINQUENT IS TOLD TO SHOW HOW A NEIGHBORHOOD LEADER CAN EMERGE FROM UNDERPRIVILEGED SURROUNDINGS TO BENEFIT HIS COMMUNITY. THE STRUCTURE OF MUNICIPAL AND TOWNSHIP YOUTH ORGANIZATIONS IS OUTLINED, AND GUIDELINES PROVIDED FOR THE EVALUATION OF NEIGHBORHOOD ORGANIZATIONS, STRESSING RECORDS ACCURACY AND CLARITY OF OBJECTIVES. BYLAWS FOR A NEIGHBORHOOD COMMITTEE, OATH FOR COMMITTEE OFFICERS, LEGISLATION CREATING YOUTH COMMISSIONS, AND LEGISLATION CREATING THE ILLINOIS COMMISSION ON DELINQUENCY PREVENTION ARE APPENDED. A BIBLIOGRAPHY AND INDEX ARE INCLUDED. (MRK)