The author reviews a facet of the history of psychoanalytic institutes from the perspective of Freud's defensive idealizations and grandiosity against narcissistic vulnerabilities that contributed to organizational difficulties. The idealizations and grandiosity were expressed in a rigid, repetitive preoccupation with protecting psychoanalysis through use of secrecy, insularity, control of power, and intolerance of diverse opinions of others. Eventually, insulating power became institutionalized, and it has interfered with a more consonant expression of the humane processes of psychoanalysis in the activities of psychoanalytic organizations. Over the past 20 years, however, several events have allowed analysts to use their increased knowledge of narcissism to tolerate their narcissistic vulnerabilities so they could use this understanding in their practice, in their psychoanalytic organizations, and in their lives. One effect of this development is that psychoanalytic organizations are undergoing constructive changes.