Shedding Light on Program Income

Program income isn’t often in the forefront of our thoughts when helping a researcher submit a proposal or manage an award.  Because we don’t deal with it often, we may have a fuzzy understanding of what program is and how we need to account for it.

The intent of this blog is to shed some light on how program income is defined, what may be sources of program income, how we need to account for it, and what the policies are regarding it.

Defined

Program income is income earned by the University that is directly generated by a sponsored activity or earned as a result of an award.  In other words, if a product or service is developed during the course of a sponsored award and the development of that product or service was funded by a sponsoring agency, then the net income received is program income.

Check out this YouTube video from NCURA member Cindy Hope in Program Income: https://www.youtube.com/watch?v=wBjJ_Bhdp50

Disclosed

Program income may be self-disclosed by the principal investigator (PI) at the time of proposal submission.  Sometimes program income is not anticipated at the time of proposal submission but arises out of opportunities that occur during the life of the award.  If this happens, the unanticipated program income should be reported by the PI or grant administrator so that it can be properly tracked and reported to the funding agency.

Policy

CSU’s policy on program income mimics OMB Uniform Guidance in that it:

• encourages grantees to earn program income whenever possible as a way to defray program costs, and
• allows program income to be used to meet mandatory cost sharing if allowable by the sponsoring agency.

Sources

Program income may come from a number of sources.  For example:

• Sale of publications, videos, or other items developed under an award
• Fees for services performed such as lab analyses and diagnostic evaluations
• Fees from participants attending workshops, performances, etc.
• Fees from use or rental of property/equipment acquired with grant funds

Use

Depending on the sponsoring agency’s guidelines, program income may be handled in the following ways:

• Matching– used to finance the non-sponsor or non-Federal share of a project
• Additive– added to the amount allowable for project costs
• Deductive– deducted from the amount reimbursed by the sponsor

For example, if a sponsor awards $100K and a project generates $30K in program income:

• Matching– if the university was required to supply $50K in matching funds, $30K of the match can come from program income (if allowed by the sponsor) and $20 from the institution or from a third party
• Additive– total project costs would now be $130K 
• Deductive– sponsor will only fund (or reimburse) $70 of the project costs

Summary

Income earned after the period of performance is not considered program income and does not have to be reported.  Government revenues in the form of taxes or special assessments or proceeds from the sale of property or equipment are not considered program income.  When in doubt, check the sponsor’s guidance or consult your grant accountant.