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Office of Sponsored Programs

Program Income – Overview and Requirements

Program income is income earned in connection with a sponsored project during the award's project period.

The recipient or subrecipient is encouraged to generate program income, when appropriate, to help defray program costs. Program income must be used for the original purpose of the federal award. Program income earned during the period of performance may be used only for costs incurred during that period or for allowable closeout costs, see §200.307, closeout 200.472 (b). Program income must be expended before requesting additional Federal funds. Any program income exceeding the amount specified in the Federal award may be added to or deducted from total allowable costs in accordance with the award’s terms and conditions.

Program income includes, but is not limited to:

Fees for services performed
Rental or use of real or personal property acquired under a federal award
Sale of commodities or items fabricated under a federal award
License fees and royalties on patents and copyrights
Principal and interest on loans made with federal award funds
Fees from services performed under the award (e.g., laboratory testing)
Rental or usage fees for equipment or computers purchased with grant funds
Sale of research materials (e.g., tissue cultures, cell lines, research animals)
Sale of software, publications, or recordings
Admission fees
Registration fees for grant-sponsored workshops or conferences

Note: While federal definitions include license fees and royalties, the University generally has no obligation to the federal government for such income unless restricted by award terms. These are handled separately—contact the Office of Technology Transfer for guidance.

Program Income does not include (2 CFR 200.307(e)):

Governmental revenues. Taxes, special assessments, levies, fines, and similar revenues that the recipient or subrecipient raised
Property. Proceeds from the sale of real property, equipment, or supplies. The proceeds must be handled in accordance with the requirements of the Property Standards of §§ 200.311, 200.313, 200.314, or as explicitly identified in Federal statutes, regulations, or the terms and conditions of the Federal award.
License fees and royalties. License fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions made under the Federal award are subject to 37 CFR part 401

Use of Program Income

Program income must be used in accordance with Uniform Guidance (2 CFR 200.307) and the specific terms and conditions of the award.

General Requirements

All expenditures must be allowable, allocable, and consistently treated in relation to the sponsor-supported activity.
Expenses must be incurred within the project period of the associated award.
Program income accounts typically operate on a cash basis and should not exceed collected revenue.
Because income is often earned after expenses (e.g., conferences), the University may allow a temporary negative balance when income is anticipated.
The PI’s department is responsible for any expenses that exceed revenue collected.
F&A (indirect) costs must be charged at the same rate as the associated sponsored award and included when establishing fees or rates.

Treatment Methods for Program Income

Program income is handled according to sponsor policy or award terms using one of the following methods:

Additive Method - Income is added to the sponsor's (and the University's, if applicable) funding and used to further project objectives.
Deductive Method - Income is deducted from the total project costs reimbursed by the sponsor.
Matching Method - Income is used to meet required cost-sharing or matching commitments.

Accounting for Program Income

Separate Accounting

Program income is tracked in a separate index.
An index number is established at award setup or as soon as program income is identified and sponsor approval is obtained.

Department Responsibilities

Collect program income and ensure deposits are made directly into the program income index.
Process allowable expenses directly on the Program income index number.
Expenses not allowable on the main award are also not allowable on the program income account unless sponsor-approved.
F&A costs are charged at the same rate as the main award, unless an exception is approved by the Vice President for Research and Development.

Establishing Rates

If program income involves the sale of goods or services, a cost analysis may be required to establish appropriate rates.

Contact the Core Facilities and HUES Evaluation Director in Research Administration for assistance.

Income After Project Ends

Program income earned after the end of a federal award’s period of performance is not subject to disposition requirements unless specified by Federal agency regulations or the award’s terms and conditions. Federal agencies may, as part of the closeout process, negotiate with recipients regarding the appropriate use of such income. Per CFR 200.307.

Roles and Responsibilities

Principal Investigators

Identify potential program income at the proposal stage or notify OSP if identified later.
Develop and document a plan for the use of program income.
Ensure income is received, deposited, and expended correctly.
Monitor financial activity to ensure income is spent before sponsor funds and does not exceed revenue.
Ensure accurate reporting at closeout.

Departmental Administrators

Assist with collection, depositing, monitoring, reconciliation, and compliance.

Department Chairs, Unit Directors, and Deans

Ensure all program income activities are disclosed.
Review and approve PI plans for use of program income.
Monitor program income accounts at the departmental level.

Office Sponsored Programs (OSP)

Assist with identification, budgeting, and approval of program income.
Establish index numbers and monitor expenditures for compliance with the terms and conditions of the award.
Report program income to sponsors and resolve balances at closeout.

Program Income Treatment Examples

Additive Method

Award: $150,000
Program Income: $15,000
Total Project Funds: $165,000

Deductive Method

Award: $150,000
Program Income: $15,000
Total Project Funds: $135,000

Matching Method

Award: $150,000
Required Cost Share: $15,000
Program Income: $15,000
Total Project Funds: $165,000