[giardini]

To answer your question in general "Every society!".

But if you're talking about the USA and want to understand why so many are not institutionalized see the single-page summary:

"A Brief History of Mental Illness and the U.S. Mental Health Care System":

http://www.uniteforsight.org/mental-health/module2

From that page:

"...the deinstitutionalization movement has been widespread, dramatically changing the nature of modern psychiatric care.(7) The closure of state psychiatric hospitals in the United States was codified by the Community Mental Health Centers Act of 1963, and strict standards were passed so that only individuals “who posed an imminent danger to themselves or someone else” could be committed to state psychiatric hospitals."