Program Income

Program income is income earned by Federal financial assistance recipients or sub-recipients from award activities.

This information applies to:

All grants and cooperative agreements

Contents

Overview

Federal regulation encourages Federal financial assistance recipients to earn income from award activities as a means to help leverage funds. This income, termed 'program income' must be properly accounted for, reported on the Federal Financial Report, and must be used in the manner approved in the Federal award.

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Authorities

2 CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

§200.1 Program income.

Program income means gross income earned by the recipient or subrecipient that is directly generated by a supported activity or earned as a result of the Federal award during the period of performance.

Program income includes, but is not limited, to income from fees for services performed, the use or rental of real or personal property acquired under Federal awards, the sale of commodities or items fabricated under a Federal award, license fees, and royalties on patents and copyrights, and principal and interest on loans made with Federal award funds. Interest earned on advances of Federal funds is not program income. Except as otherwise provided in Federal statutes, regulations, or the terms and conditions of the Federal award, program income does not include rebates, credits, discounts, and interest earned on any of them.

§200.307 Program income.

(a) General. The recipient or subrecipient is encouraged to earn income to defray program costs when appropriate. Program income must be used for the original purpose of the Federal award. Program income earned during the period of performance may only be used for costs incurred during the period of performance or allowable closeout costs. Program income must be expended prior to requesting additional Federal funds. Program income exceeding amounts specified in the Federal award may be added to or deducted from the total allowable costs in accordance with the terms and conditions of the Federal award.

(b) Use of program income. There are three methods of applying program income: deduction; addition; and cost-sharing. The Federal agency should specify what program income method(s) will be used in the terms and conditions of the Federal award. The deduction method will be used if the Federal agency does not specify a method for applying program income. When no program income method is specified in the Federal award, prior approval is required to use the addition or cost sharing methods. However, the addition method will be used when no method is specified for awards made to institutions of higher education (IHE) and nonprofit research institutions. In specifying alternatives to the deduction and addition methods, the Federal agency may distinguish between income earned by the recipient and income earned by subrecipients as well as between the sources, kinds, or amounts of income.

(1) Deduction. Program income is deducted from the total allowable costs, reducing the overall total amount of the Federal award.

(2) Addition. Program income is added to the total allowable costs, increasing the overall total amount of the Federal award.

(3) Cost sharing. Program income is used to meet the Federal award's cost sharing requirement.

(c) Income after the period of performance. There are no requirements governing the disposition of program income earned after the end of the period of performance of the Federal award unless stipulated in the Federal agency regulations or the terms and conditions of the Federal award. The Federal agency may negotiate agreements with recipients regarding appropriate uses of income earned after the end of the period of performance as part of the closeout process.

(d) Cost of generating program income. If authorized by Federal regulations or the Federal award, costs incidental to generating program income may be deducted from gross income to determine program income, provided these costs have not been charged to the Federal award.

(e) Not considered program income. The following are not considered program income unless specified in Federal statutes, regulations, or the terms and conditions of the Federal award:

(1) Governmental revenues. Taxes, special assessments, levies, fines, and similar revenues the recipient or subrecipient raised.

(2) Property. Proceeds from the sale of real property, equipment, or supplies. The proceeds must be handled in accordance with the requirements of the Property Standards of §§ 200.311, 200.313, 200.314, or as explicitly identified in Federal statutes, regulations, or the terms and conditions of the Federal award.

(3) License fees and royalties. License fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions made under the Federal award subject to 37 CFR part 401.

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