THE LOWER EAST SIDE FAMILY UNION (LESFU) AIMS TO COMBAT THE EFFECTS OF FAMILY DYSFUNCTION WHILE PROMOTING THE WELL-BEING AND DEVELOPMENT OF CHILDREN IN IMPAIRED FAMILIES THROUGH A COMPREHENSIVE PREVENTIVE APPROACH. FOUR APPROACHES ARE TAKEN BY LESFU: INTEGRATION OF SERVICES THROUGH CONTRACTS BETWEEN FAMILIES AND SERVICE PROVIDERS, A VIEW OF THE FAMILY AS EXISTING WITHIN A SET OF SOCIAL AND ENVIRONMENTAL SYSTEMS, PRACTICAL HELP IN STRESS SITUATIONS, AND THE INVOLVEMENT OF PARENTS AS SOCIAL ADVOCATES FOR THEIR CHILDREN. WITHIN ITS FIRST YEAR, THE LESFU PROJECT ACHIEVED MAJOR IMPLEMENTATION OF THE COMPREHENSIVE PREVENTIVE SERVICES. THE STAFF WAS EXPANDED; THE NEIGHBORHOOD SERVICES NETWORK WAS ORGANIZED WITH 12 PARTICIPATING AGENCIES; AND THE USE OF THE FAMILY SERVICE CONTRACTS WAS BEGUN. ALSO, NEIGHBORHOOD HOMES FOR SHORT-TERM PLACEMENTS WERE OBTAINED AND UTILIZED, AND ACTIVE CITY PARTICIPATION AND COMMITMENT TO THE PROJECT WAS SECURED. THE BODY OF THE REPORT EXAMINES THE PROBLEMS OF PLACEMENT IN THE CHILD WELFARE SYSTEM. AMONG THE OTHER DIFFICULTIES ENCOUNTERED ARE INADEQUATE COORDINATION OF SERVICES, SCANT INTEGRATION OF CLIENTS INTO THE TREATMENT PROCESS, NEGLIGIBLE COMMUNITY SUPPORT FOR ALTERNATIVE SERVICE MODELS, AND AN ALARMING RISE IN COSTS FOR THE CARE OF CHILDREN. AS THE LESFU PROGRAM MATURES, IT WILL PROVE THE FINANACIAL ADVANTAGES OF ITS NEIGHBORHOOD-BASED MODEL AND BRING ABOUT THE NECESSARY CHANGES IN A FAILING CHILD WELFARE SYSTEM. APPENDED DOCUMENTS INCLUDE CHILD WELFARE BRIEFS, THE LESFU NEWSLETTER, AND A JOURNAL ARTICLE COMMENDING THE PROGRAM. SAMPLE CONTRACTS AND CASE STUDIES ARE INCLUDED. (NFE)