A few weeks later, triumph turned into tears when the fund wrote Sara asking for more money. “She was devastated because she thought she had taken care of that problem,” says Polly Newland, who then patiently told her daughter that there are lots of big problems that require continual help from lots of people. That explanation worked. Sara, now 9, has expanded her causes. Through her school, she helps out at an inner-city child-care center; she also regularly brings meals to homeless people in her neighborhood.

A sensitive parent can make all the difference in encouraging–or discouraging - a child’s developing sense of morality and values. Psychologists say that not only are parents important as role models, they also have to be aware of a child’s perception of the world at different ages and respond appropriately to children’s concerns. “I think the capacity for goodness is there from the start,” says Thomas Lickona, a professor of education at the State University of New York at Cortland and author of “Raising Good Children.” But, he says, parents must nurture those instincts just as they help their children become good readers or athletes or musicians.

That’s not an easy task these days. In the past, schools and churches played a key role in fostering moral development. Now, with religious influence in decline and schools wavering over the way to teach values, parents are pretty much on their own. Other recent social trends have complicated the transmission of values. “We’re raising a generation that is still groping for a good future direction,” says psychologist William Damon, head of Brown University’s education department. Many of today’s parents were raised in the ’60s, the age of permissiveness. Their children were born in the age of affluence, the ’80s, when materialism was rampant. “It’s an unholy combination,” says Damon.

These problems may make parents feel they have no effect on how their children turn out. But many studies show that parents are still the single most important influence on their children. Lickona says that the adolescents most likely to follow their consciences rather than give in to peer pressure are those who grew up in “authoritative” homes, where rules are firm but clearly explained and justified - as opposed to “authoritarian” homes (where rules are laid down without explanation) or “permissive” homes.

The way a parent explains rules depends, of course, on the age of the child. Many adults assume that kids see right and wrong in grown-up terms. But what may be seen as “bad” behavior by an adult may not be bad in the child’s eyes. For example, a young child may not know the difference between a fanciful tale and a lie, while older kids - past the age of 5 - do know.

Many psychologists think that in children, the seeds of moral values are emotional, not intellectual. Such traits as empathy and guilt - observable in the very young - represent the beginning of what will later be a conscience. Even newborns respond to signs of distress in other. In a hospital nursery, for example, a bout of crying by one infant will trigger wailing all around. Research on children’s attachment to their mothers shows that babies who are most secure (and those whose mothers are most responsive to their needs) later turn out to be leaders in school: self-directed and eager to learn. They are also most likely to absorb parental values.

The first modern researcher to describe the stages of a child’s moral development was Swiss psychologist Jean Piaget. In his groundbreaking 1932 book, “The Moral Judgment of the Child,” he described three overlapping phases of childhood, from 5 to 12. The first is the “morality of constraint” stage: children accept adult rules as absolutes. Then comes the “morality of cooperation,” in which youngsters think of morality as equal treatment. Parents of siblings will recognize this as the “If he got a new Ninja Turtle, I want one, too,” stage. In the third, kids can see complexity in moral situations. They can understand extenuating circumstances in which strict equality might not necessarily mean fairness (“He got a new Ninja Turtle, but I got to go to the ball game, so it’s OK.”)

Although Piaget’s conclusions have been expanded by subsequent researchers, his work forms the basis for most current theories of moral development. In a study begun in the 1950s, Lawrence Kohlberg, a Harvard professor, used “moral dilemmas” to define six phases. He began with 50 boys who were 10,13 and 16. Over the next 20 years, he asked them their reactions to carefully constructed dilemmas. The most famous concerns a man named Heinz, whose wife was dying of cancer. The boys were told, in part, that a drug that might save her was a form of radium discovered by the town pharmacist. But the pharmacist was charging 10 times the cost of manufacture for the drug and Heinz could not afford it - although he tried to borrow money from everyone he knew. Heinz begged the pharmacist to sell it more cheaply, but he refused. So Heinz, in desperation, broke into the store and stole the drug. Kohlberg asked his subjects: Did Heinz do the right thing? Why?

Kohlberg and others found that at the first stage, children base their answers simply on the likelihood of getting caught. As they get older, their reasons for doing the right thing become more complex. For example, Lickona says typical 5-year-olds want to stay out of trouble. Kids from 6 to 9 characteristically act out of self-interest; most 10- to 13-year-olds crave social approval. Many 15- to l9-year-olds have moved on to thinking about maintaining the social system and being responsible.

Over the years, educators have used these theories to establish new curricula at schools around the country that emphasize moral development. The Lab School, a private preschool in Houston, was designed by Rheta DeVries, a student of Kohlberg’s. The teacher is a “companion/guide,” not an absolute authority figure. The object of the curriculum is to get kids to think about why they take certain actions and to think about consequences. For example, if two children are playing a game and one wants to change the rules, the teacher would ask the other child if that was all right. “Moral development occurs best when children live in an environment where fairness and justice is a way of life,” says DeVries.

Not everyone agrees with the concept of moral development as a series of definable stages. Other researchers say that the stage theories downplay the role of emotion, empathy and faith. In “The Moral Life of Children,” Harvard child psychiatrist Robert Coles tells the story of a 6-year-old black girl named Ruby, who braved vicious racist crowds to integrate her New Orleans school - and then prayed for her tormentors each night before she went to bed. Clearly, Coles says, she did not easily fall into any of Kohlberg’s or Piaget’s stages. Another criticism of stage theorists comes from feminist psychologists, including Carol Gilligan, author of “In a Different Voice.” Gilligan says that the stages represent only male development with the emphasis on the concepts of justice and rights, not female development, which, she says, is more concerned with responsibility and caring.

But many psychologists say parents can use the stage theories to gain insight into their children’s development. At each phase, parents should help their children make the right decisions about their behavior. In his book, Lickona describes a typical situation involving a 5-year-old who has hit a friend over the head with a toy while playing at the friend’s house. Lickona suggests that the parents, instead of simply punishing their son, talk to him about why he hit his friend (the boy played with a toy instead of with him) and about what he could do next time instead of hitting. The parents, Lickona says, should also discuss how the friend might have felt about being hit. By the end of the discussion, the child should realize that there are consequences to his behavior. In Lickona’s example, the child decides to call his friend and apologize - a positive ending.

For older children, Lickona suggests family “fairness meetings” to alleviate tension. If, for example, a brother and sister are constantly fighting, the parents could talk to both of them about what seem to be persistent sources of irritation. Then, youngsters can think of ways to bring about a truce - or at least a cease-fire.

Children who learn these lessons can become role models for other youngsters - and for adults as well. Sara Newland tells her friends not to be scared of homeless people (most of them rush by without even a quick glance, she says). “Some people think, ‘Why should I give to them?’” she says. “But I feel that you should give. If everyone gave food, they would all have decent meals.” One recent evening, she and her mother fixed up three plates of beef stew to give out. They handed the first to the homeless man who’s always on their corner. Then, Sara says, they noticed two “rough-looking guys” down the block. Sara’s mother, a little scared, walked quickly past them. Then, she changed her mind and asked them if they’d like some dinner. “They said, ‘Yes, God bless you’,” Sara recalls. “At that moment, they weren’t the same people who were looking through a garbage can for beer bottles a little while before. It brought out a part of them that they didn’t know they had.”

It’s not quite as much fun as the “Aesop And Son” cartoons on “Rocky and Bullwinkle,” but this little book makes lessons in right and wrong easy to take. Richly detailed paintings inform 13 well-known fables whose timeless morals include “Do not pretend to be something that you are not”; “It is possible to have too much of a good thing” and the classic observation on sour grapes, “It is easy to despise what you cannot obtain.”