In 2004, universities and not-for-profits filed over 10,517 U.S. patents and generated licensing income of $1.385 billion dollars (AUTM, 2004). Researchers have examined the impact that the amount of revenue allocated to faculty inventors has on various performance metrics of the technology transfer process, although the results have been mixed (Friedman & Silberman, 2003; Lach & Schankerman, 2003, Markman, Gianiodis, Phan, & Balkin, 2004). However, the impact that allocations to the technology transfer office (TTO) have on the performance of TTOs as well as the technology transfer process have not been adequately examined. Receiving a larger share of revenue might lead to TTO directors being more motivated, and would give them more resources for patenting and marketing activities. However, if the university gives TTOs a large share of licensing revenue at the expense of inventors, than inventors may not be motivated to develop high-quality ideas. Therefore, we ask the questions: (1) How do payouts affect the performance of inventors as well as TTOs? (2) What factors determine the payout to faculty inventors?