Many experts in moral education agree that the potential for empathy, a key moral emotion, is innate. However, it is also evident that this potential needs to be developed if children are to acquire crucial moral qualities such as honesty, concern for others and a sense of fairness. Our central claim is that important structural changes in both families and schools may be necessary for the development of empathy and, hence, the fostering of these moral virtues. Since many families and schools are far from ideal, both are likely to need help from the other and each can compensate to some extent for the other's failings. However, unless families become more sex-egalitarian, and schools become more multicultural in their student and faculty populations as well as their curricula, both lack components necessary for their success as moral educators. If such changes occur, the resulting dynamic between families and schools may be ideal for the healthy moral development of citizens.