Grants Accounting

Program Income Procedures

Program Income includes, but is not necessarily limited to:
    •       Income for fees or 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.
 Use of Program Income
 
      In general, the federal government allows program income
      to be used in one of three
methods: 
    1. It may expand the scope of the project over and
      above the federal and nonfederal shares provided
      in the original budget (the “Additive” alternative);
    2. It may be used exclusively to meet the matching
      and cost sharing obligations of the university in
      whole or in part; or
    3. It may be spent and thereby proportionally reduce
      the federal and nonfederal required contributions to
      a project (the “Deductive” alternative).
Standard practice at the university is to use the Deductive
alternative (#3) unless specifically directed to a differing
method in the grant agreement.
 
During the initial meeting between the PI and Grants Accountant,
upon receipt of the award, the level of program income activity,
if any is reviewed. If the amount of program income to be
generated is expected to be significant, the Grant Accountant
will assist in establishing a separate fund to be used by the PI
to record all program income activity. This “Program Income”
fund will roll up under the overall grant code, used to consolidate
all grant financial activity for federal billing and reporting purposes.
 
If it is determined that program income will be minimal, then it
is recorded directly to the grant fund, where it is used as the
first deduction against expenses for federal billing and reporting
purposes.

Page last modified March 29, 2010