Overview
Program income is defined as gross income earned that is directly generated by a supported project activity or earned as a result of the award during the period of performance.
Examples of program income include:
- Income from fees, such as registration fees for conferences and workshops
- Fees charged for laboratory tests and analysis
- License fees and royalties on patents and copyrights
- Fees garnered from the use or rental of property acquired using award funds
- Proceeds from the sale of items fabricated using award funds, such as software, CDs, tapes, or publications.
When income is directly generated by a supported activity or earned as a result of an award, that income is considered part of the award and must be spent on award activities (i.e., funds generated by one award cannot be used for a different award or other activity). Program income is subject to the award terms and conditions, must be treated according to the sponsor’s requirements, and should be expended prior to requesting reimbursement against the award. There are no Federal requirements governing the disposition of income earned after the period of performance, unless the award specifies otherwise in the terms and conditions.
For more information, please refer to the Uniform Guidance, § 200.307: Program Income and Program Income Procedures (PDF).
Program income on federal awards does not include:
- Interest earned on advances or awards
- Proceeds from the sale of equipment
- Credits, discounts, rebates and interest earned on any of them, unless otherwise stated in the federal regulations, statutes, or the terms and conditions of the award.
Types of Program Income
Additive
Program income funds are added to award funds, thus increasing the amount available to accomplish the objectives of the sponsored project.
Example
The award amount is $100,000. Then $20,000 in program income is added to the $100,000 award amount, increasing the PI's authority to spend to $120,000. Typically, program income generated by research awards follow the additive method.
Deductive
Total funds available to the project remain the same and the funds generated through program income are deducted from the financial commitment of the sponsor.
Example
The award amount is $100,000. When $20,000 of the program income is earned, it is deducted from the sponsor's commitment. The total award amount remains the same, but the sponsor's liability is reduced from $100,000 to $80,000. Typically, program income generated by non-research awards follow the deductive method.
Matching
Program income funds are used to finance the non-sponsor share of the award (mandatory or committed cost sharing).
Matching program income applies funds to cost sharing rather than award funds. The total cost sharing commitment does not change, but income earned through award activities can be used to meet that commitment.
Example
$20,000 of program income is applied to the cost sharing commitment of $30,000, thereby reducing the university's liability to $10,000 of funding.
Add/Deduct
A portion of program income is added to the award funds (up to a limit specified by the sponsor) increasing the amount available to spend. The remaining program income is deducted from the sponsor’s financial commitment without decreasing the award amount. The add/deduct method is rarely used.
Example
The sponsor allows 50% of program income to be additive. When $20,000 of program income is earned, $10,000 is additive, which increases the total authority to spend to $110,000. The remaining $10,000 of net program income is deductive, which reduces the sponsor's liability to $90,000, but keeps the total award amount at $100,000.