Institutional racism is:
'the collective failure of an organisation to provide an appropriate and professional service to people because of their colour, culture, or ethnic origin. It can be seen or detected in processes, attitudes and behaviour which amount to discrimination through unwitting prejudice, ignorance, thoughtlessness and racist stereotyping which disadvantage minority ethnic people.
It persists because of the failure of the organisation openly and adequately to recognise and address its existence and causes by policy, example and leadership
(Macpherson Report 1999).
In short, it is the policies of institutions that work to perpetuate racial inequality without acknowledging the fact (Cashmore & Troyna 1990). It is sometimes referred to as camouflaged racism, meaning that it is not open and visible but concealed (Glasgow 1980).
The term institutional racism came into common usage with the publication of the Stephen Lawrence Inquiry (Macpherson Report) (1999) and its accepted definition derives from that report. The report acknowledged the term will be the subject of much debate because of its implied criticism of the institution, whether that be the police (as in the original report), or schools or British society at large. The report also stated that their definition was not set in stone or a final answer to the question.
Macpherson (1999) The Stephen Lawrence Inquiry (Report of an Inquiry by Sir William Macpherson of Cluny), The Stationary Office.