Donating Dragons to the Academy will help to increase the abilities of other Dragons. But you might want to retain some duplicates of 3+ star Dragons for future training, that require multiple copies.
Open your Roster by clicking on the bottom left symbol on your home screen. Chose a Dragon you wish to level up and chose up to 10 other Dragons you want to release in return. While you are selecting Dragons to donate, look at your level bar to see which level you would reach. Pay a corresponding amount of fish and level up.
At the bottom, you see the chances of increasing your ability ranking. The more Dragons you will free and the rarer they are, the better are the chances for your own Dragon to gain a higher ability rank.