Program Income

Some sponsored activities generate income as a by-product of the work performed. Federal regulations refer to this as program income. 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 and must be treated according to the sponsor’s requirements. Please refer to Program Income Procedures (PDF) for more information.

Program income on federal awards does not include income earned after the expiration of the award, the receipt of principal on loans, rebates, credits, discounts, etc., or interest earned on any of these, unless otherwise stipulated by federal awarding agency regulations or terms and conditions of the award. Income generated through non-federal awards is handled according to the sponsor's terms and conditions.

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 net 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. Here, when $20,000 of net 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 is fairly rare, and 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 net 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.

Some National Institute of Health (NIH) awards require a method that splits program income and applies it according to sponsor requirements. A portion of the income - up to a sponsor-defined limit - is additive and increases the total amount available to spend. Any remaining income is deductive and reduces the sponsor's financial liability without decreasing the award amount.

Example

The sponsor allows 50% of net income to be additive. When $20,000 of net 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 reduced the sponsor's liability to $90,000, but keeps the total award amount at $100,000.