Children who are cared for in a facility outside their family home, also referred to as residential care.

Institutionalization is the placing of emotionally or physically handicapped children in a therapeutic facility outside of the home. In 1990, the American Public Welfare Association estimated that just over 400,000 children were living in residential care in the United States. However, three-quarters of those children are in foster care. Only 16%, or 65,000, are in group homes, residential treatment centers, or psychiatric hospitals. Group homes may have as few as four children; residential treatments may have 100 or more young people housed in groups of 8-12 and supervised by house parents or childcare personnel.

Child welfare experts differ widely on the long-term effects of institutionalization. A shortage of research funds means that little solid evidence exists to support one side or the other. While laws exist to provide out-of-home placement, the...