Concurrent with the recent increased growth of college and university fund-raising efforts, many development offices have explored alternative organizational structures. Instead of the traditional centralized development office which performs fund raising on behalf of the institution as a whole, some institutions have begun to decentralize their development activities by assigning constituent personnel to raise funds exclusively for individual college units (for example, the college of engineering or the athletic department). Many development administrators believe that decentralized development programs have distinct advantages over previous centralized forms. Some frequently mentioned benefits include the ability to capitalize on feelings of alumni loyalty to individual colleges rather than to monolithic institutions and more active participation in fund-raising problem solving by individual college units. These advantages are often believed to result in greater efficiency for decentralized fund-raising organizations.
Organizational theorists have proposed that the special attributes of higher educational organizations lead them to adopt unique forms of administrative control and organizational structure [3, 6, 21, 25]. March and Olsen  and Weick  have proposed that educational organizations have "loosely coupled" internal structures; that is, the formal structures of educational institutions are largely disconnected from their technical activities, and activities are disconnected from effects. These structures arise because the success of educational organizations is determined by their ability to conform to ritual categories in the institutional environment, not by their outputs . Changes in the organizational structures of higher educational institutions are most likely to occur in response to changes in the institutional environment rather than as a result of organizational growth or changes in technology.
Institutional theories of higher education are primarily concerned with explaining the relationships between the institutional environments of educational organizations, their structures, and the main activities of these organizations, instruction . Yet, there are important differences between college development offices and instructional units. Unlike instructional units, development offices are profit-oriented organizations. The technology of college development is more clearly understood than the technology of college instruction; development programs have a relatively close correspondence between activities (solicitation) and outputs (money raised). Although the confidence of members of the institutional environment is important, the success of development organizations is primarily judged by the amount of money they raise. Palmer, Jennings, and Zhou  suggest that institutional forces are present, to some extent, even in the structural reorganization of conventional business firms; yet, they also emphasize the importance of other determinants of organizational change for profit-oriented enterprises. Thus, it may be helpful to seek alternative explanations for development office reorganization.
Organizational Form and Profitability
Lawrence and Lorsch  proposed that organizational differentiation (decentralization) is a natural consequence of increased environmental complexity and dynamism. Because managers have a limited span of surveillance, organizations performing diverse tasks in unstable and heterogeneous environments must split into multiple operating units in order to perform effectively. Decentralization enables managers of each unit to react more appropriately to the specific demands of their external environments. The authors found that for organizational units performing complex tasks in dynamic and heterogeneous environments, increased decentralization was associated with increased performance. …