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Program Income

Sponsored projects conducted by non-federal entities, such as a university, are encouraged to earn income to offset program costs where appropriate. Most federal agencies require applicants to list estimated income (and source) on grant applications, but programs should consult award documents for details specific to their projects. Universities are required to report program income generated during the performance of an award, and all program income must be properly identified.


Definitions

Program Income: refers to the gross income generated through activities supported by the Federal award during the period of performance (2 CFR 200.80). It includes, but is not limited to:

  • Fees earned for services performed under the grant, such as those resulting from laboratory drug testing.
  • Rental or usage fees of real or personal property purchased with award funds.
  • Funds generated by the sale of commodities, such as tissue cultures, cell lines, or research animals.
  • Income earned from license fees and royalties for copyrighted material, patent applications, trademarks and inventions produced under an award.
  • Principal and interest on loans made with award funds.
  • Fees received to attend conferences or workshops funded by a sponsored project.

If authorized by the sponsor, a project may deduct costs incidental to the generation of income from gross income, provided these costs have not been charged to the award. Unless otherwise specified in the awarding agency regulations or the terms of the award, program income does not include:

  • The receipt of principal on loans, rebates, credits, discounts, or interest earned on these.
  • Interest earned on advances of federal funds.
  • Income earned after the end of the project period.
  • Proceeds from the sale of real property, equipment, or supplies.

 Use of Program Income

If the award agency does not specify in its regulations or in the terms and conditions of an award, or give prior approval for how program income is to be used, Option 1 below (Addition model) applies to all program income generated by the award. These funds must be used to further project directives and in accordance with the terms and conditions of the award.

The federal agency may specify other program income uses. Refer to the terms and conditions of the award for information specific to the project. The three options for use of program income described in federal regulations are:

Option 1
(Addition)
Added to the award, used for the purposes and under conditions of the award.
Option 2
(Deduction)
Deducted from the total project allowable cost in determining the net allowable costs on which the federal share of costs is based.
Option 3
(Cost Sharing)
With sponsor prior approval, used to meet the cost sharing or matching requirements of the award.

Income after the period of performance

Unless specified in the terms and conditions of an award, there are no Federal requirements for use of program income earned after the period of performance. The Federal government may negotiate agreements regarding these funds as a part of the closeout process. 

Last updated: 9/25/2020