Program Income means gross income earned by the institution that is directly generated by a supported activity or earned as a result of an award during the period of performance. Such earnings include but are not limited to income from fees for services performed, the use or rental of real or personal property acquired under the award, the sale of commodities or items fabricated under the award, principal and interest on loans made with award funds, registration fees for workshops, and conference fees.
Income generated through non-federal awards is handled according to specific sponsor rules as referenced in the award document. If the sponsor is silent on this issue of program income, the income is not reportable and therefore not considered program income. The revenue is handled according to the University policy for non-grant related income, found on the Customer Account Services Website.
If a project is expected to generate program income, the Office of Grant and Contract Accounting should be contacted for further assistance and instructions. Program income derived from an award agreement must be accounted for under a separate project number (ex. FARP0XXXXX).
Accounting for Program Income
Program income revenue may be accounted for in one of three ways depending on sponsor policies. Regardless of the accounting method used, program income may be used only for allowable costs in accordance with the applicable cost principles and the terms and conditions of the award.
- Addition: unless specified otherwise in the award agreement, program income should be added to the award. The program income must be used for the purposes and under the conditions of the award agreement
- Cost sharing or matching: with prior approval from the awarding agency, program income may be used to meet the cost sharing or matching requirement of the award. The amount of the award agreement remains the same
- Deduction: Program income is deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the awarding agency authorized otherwise. Program income that the institution did not anticipate at the time of the award must be used to reduce the award and institution contributions rather than increase the funds committed to the project.
Examples of three methods for using Program Income Revenues
Addition: The initial project was $100,000.00. $10,000.00 of program income is generated. The total project costs may be $110,000.00. ($100,000.00 expensed on the main project and $10,000.00 expensed on the program income project)
Cost sharing or matching: The initial project was $100,000.00 with cost sharing committed at $20,000.00. $10,000 of program income is generated. The expenditures of the program income may be used to account for $10,000.00 of the committed cost sharing.
Deduction: The initial project was $100,000.00. $10,000.000 of program income is generated. The adjusted project budget amount from the sponsor is reduced to $90,000.00 after gross program income is taken into account. Total project costs remain at $100,000.00 ($90,000.00 on the award project and $10,000 on the program income project.)