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Ibby, English is a living language with streamlining changes often occurring to suit a particular purpose; unfortunately, sometimes at the loss of specificity. Frankly, you haven't been living long enough for your endorsement of such changes to carry much weight.
Go back to Webster's New World Dictionary Second College Edition, Copyright 1976 and we find:
ra.cial.ism n. 1. a doctrine or teaching, without scientific support, that claims to find racial differences in character, intelligence, etc., that asserts the superiority of one race over another or others, and that seeks to maintain the supposed purity of a race or the races. 2. same as RACISM (sense 2) ---ra'cial.ist n., adj.
The first sense of the above word is where the "institutionalized" aspect comes from as doctrines and teachings are primarily the purview of the prevailing culture.
ra.cism n. 1. same as RACIALISM (sense 1) 2. any program or practice of racial discrimination, based on racialism ---rac'ist n., adj.
This is the word that was intended to describe "any" (i.e. institutional and individual) racial discrimination.
In the good ol' USA, the word "racialism" fell out of popularity with "racism" being substituted for it while maintaining its application for describing individuals as racists. The definition you presented seems to drop that application which, as Clod said, would preclude any individual from being called racist; unless, their whole cultural social structure exhibited the same behavior. This reeks of agenda. I don't buy it; but, I can see how it would appeal to a connoisseur of poppycock.
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