How was it decided?

"How was it determined who would be organ donors and who would be the receivers of donors?
Did they try get into that school? Was it random unlucky selection?"

As Kathy H was narrating the story, we never found out those things. We don't know how the cloning process works, what happens to the clones when they're born or how it was decided which institution they would be sent to. It probably was a random thing. As for society at large, most people probably wouldn't have thought about it. (Just as we tend not to think about cattle farms and slaughterhouses when we're enjoying our steak.) Life expectancy is 100 years, previously incurable diseases have been overcome. Nobody considers the ethical factors that enable this, and nobody wants to.

Hailsham was something of an experiment, which relied on the funding and generosity of philanthropists. It was one of the first schools to nurture clones as if they were "real" people. But Hailsham eventually lost its funding and closed. The institutions that rear the clones are described by Tommy as "battery farms". We don't know exactly how the clones are treated in these places, only that it's a lot less humane than Hailsham was.

All the clones were donors. They were cloned specifically for that purpose. The recipients were the "normal" people.

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You got your mind right, Luke?

It was suggested that cloning tissue was gathered from the homeless, the prostitutes, etc. I presume the decision was based on the genetic makeup of the individuals, with emphasis on factors such as health, blood type, race, eye color, possibly beauty, since any part of the body may donatable.

Now that I think about it, the clones in the movie looked darn good after the surgeries, considering the disfigurement that could have occurred.