This paper addresses the question of the distribution of federal research funds. It is noted that the top five institutions in terms of federal funding occupy very stable and extremely high rankings in terms of the quality of their academic programs in a variety of fields. It is suggested that this is part of their overall strategy for achieving organizational effectiveness. The implications for technology generation and transfer are discussed. In view of the various theories of organizational effectiveness, it is noted that research oriented universities that consistently win in the quest for federal research funds have developed both the structure and atmosphere necessary for responding to external groups. © 1984 Technology Transfer Society.