Program Income must be identified, documented and reported to the federal government when earned on Federal and Federal-pass-through projects, according to the terms and conditions of the sponsored project. Some non-federal agencies may also have requirements for identifying and tracking Program Income.

Generally, Program Income on federal awards may be used in one of three methods, as determined by the awarding agency:

• Added to funds committed to the project by the Federal awarding agency and IU and used to further eligible project or program objectives.
• Used to finance IU’s share of the project or program (cost-share).
• Deducted from the total project or program allowable cost in determining the net allowable costs on which the Federal share of costs is based.

In some cases the awarding agency may use a combination of methods.

The principal investigator is responsible for working with his/her fiscal officer and Contract and Grant Administration (C&G) when Program Income is earned in order to properly record, expend and report the income to the funding agency.

For federal grants with multiple non-competing segments, departments should detail the earned and expended Program Income on the appropriate forms for the non-competing continuation request.

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 federally-funded projects, the sale of commodities or items fabricated under an award, license fees and royalties on patents and copyrights, and interest on loans made with award funds. While all other Program Income is reportable, income earned from license fees and royalties for copyrighted materials, patents, patent applications, trademarks and invention is not reportable.

When Program Income is not anticipated during the proposal preparation process and arises out of opportunities that occur during the life of the award, the principal investigator is responsible for notifying his/her fiscal officer and C&G in order to establish the Program Income account. Program Income revenue must be deposited according to the requirements of Treasury policy VI-120.

Most federal agencies identify the method for accounting for Program Income in the award notice, or have default rules for accounting for Program Income. C&G uses separate accounts to house Program Income and related expenses. The Program Income account and the main grant account are linked in the FIS and both accounts are included in financial reports to agencies. The Financial Status Report submitted to the agency must include the aggregate amounts earned and spent.

Regulations of the federal awarding agency or the terms and conditions of the award should be reviewed for any specific language regarding Program Income for your project. Unless otherwise required by the awarding agency, recipients shall have no obligation to the Federal Government to report Program Income earned after the end of the project period.

A-110, OMB Circular A-110

I-450, Establishing and Generating Revenue Producing Activity (RPA)

VI-120, Revenue Processing