Scope
The purpose of this procedure is to assist Principal Investigators and departmental administrators in understanding the regulations and guidelines concerning program income derived from sponsored programs. The University is required to report program income from federal grant sources. This procedure documents established practices.
Definitions
Program income includes but is not limited to income from fees for services performed, the use or rental of real or personal property acquired under federal awards, the sale of commodities or items fabricated under a federal award, license fees and royalties on patents and copyrights, and principal and interest on loans made with federal award funds.
Unless the federal statute, regulations, or terms and conditions for the federal award provide otherwise, the non-federal entity is not accountable to the federal awarding agency with respect to program income earned from license fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions made under a federal award to which 37 CFR part 401 is applicable.
Interest earned on advances of federal funds is not program income. Except as otherwise provided in federal statutes, regulations, or the terms and conditions of the federal award, program income does not include rebates, credits, discounts, and interest earned on any of them.
Responsibility
Principal Investigators, with departmental administrative support, are responsible for:
- Ensuring that generated program income as a result of sponsored projects is properly used, accounted for, and reported; and
- Requesting an account to document receipt of income.
The Office of Sponsored Programs (OSP) is responsible for:
- Overseeing the reporting of program income generated during the performance of the grant in accordance with sponsor guidelines.
The OSP will create a Grant with Spend Restriction Allowable Program Income to account for the program income generated from the sponsored award.
Procedure
Use of Program Income
Per the Uniform Administrative Requirements, Cost Principles and Audit Requirements (2 CFR 200 part 307), program income shall be retained by the recipient and, in accordance with federal awarding agency regulations or the terms and conditions of the award, and shall be used in one or more of the following ways:
Option 1 (Additive Alternative)
Program income is added to funds committed to the project by the federal awarding agency and recipient and used to further eligible project or program objectives.
Option 2 (Matching Alternative)
Program income is used to finance the non-federal share of the project or program.
Option 3 (Deductive Alternative)
Program income is deducted from the total project or program allowable cost in determining the net allowable costs on which the federal share of costs is based.
Agency regulations or the terms of the award normally specify the option to be used. If the awarding agency does not specify, OSP will always choose the ADDITIVE method for reporting.
Option 4 (Combination Alternative)
All program income up to (and including) $25,000 is used as specified under the additive alternative, and any amount of program income exceeding $25,000 is applied under the deductive alternative.
Whenever practical, federal sponsors encourage award recipients to expend program income prior to requesting sponsor funds and avoid having unexpended program income remaining at the end of the award.
Program income must be spent in accordance with the terms and conditions of the award it is tied to. Expenses charged on the program income Grant must be allowable, allocable, and reasonable in relation to the activity supported by the award and/or sponsor. Unallowable expenses on the sponsored awards are also unallowable on the program income worktag. If F&A is charged on the related sponsored award, F&A is permissible to charge on the program income expenses.
Income after the Period of Performance
There are no federal requirements governing the disposition of income earned after the end of the period of performance for the federal award, unless the federal awarding agency regulations or the terms and conditions of the federal award provide otherwise. The federal awarding agency may negotiate agreements with recipients regarding appropriate uses of income earned after the period of performance as part of the grant closeout process.
Reporting
The University is required to report program income generated during the performance of the sponsored project. The Principal Investigator, with departmental administrative support, is responsible for ensuring that the program income generated is posted to the appropriate Grants associated with the sponsored awards.
OSP has oversight for reporting program income generated during the performance of the grant in accordance with sponsor guidelines.
Reporting Exceptions and Special Handling
Unless otherwise noted in the terms and conditions of the award or in the awarding agency guidelines and regulations, the Government does not require reporting of the following as program income:
- Income resulting from licensing fees and/or royalties from copyrighted material;
- Income from patents, patent applications, trademarks, and inventions produced under an award; or
- Income earned after the end of the grant or contract project period.
Ownership
The Executive Director of the Office of Sponsored Programs is responsible for ensuring that this procedure is necessary, reflects actual practice, and supports University policy.