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This study intends to find out the pattern of institutionalizing village democracy in managing village funds. The aim is to find out why a village is prosperous, and some are not successful in managing funds so that it has an impact on the size of the villages original income. This study conducted in three villages, namely Pujon Kidul Village, Krebet Village, and Sanankerto Village in Malang Regency, East Java. Through the case study method, the research concluded that the pattern of democratic institutionalization based on the rational choice institutionalism approach in managing village funds proved to be successful in managing village funds whereas the design of institutionalizing democracy that uses a normative institutional approach has proven to be a failure in managing village funds