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Program income can be described as income earned by the University of ÁùºÏ±¦µä, Reno (University) that is directly generated by a sponsored activity or earned as a result of a sponsored award. The following are some examples of program income:

• Conference registration fees when a grant funds the conference
• Funds generated through the sale of research materials such as tissue cultures or research animals
• Sale, rental or usage fees of laboratory equipment purchased with grant funds
• License fees

Federal Guidelines for Program Income

Federal guidelines for the treatment of program income exist in the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, 2 CFR 200, , which defines program income as follows:

Program income means gross income earned by the non-Federal entity that is directly generated by a supported activity or earned as a result of the Federal award during the period of performance except as provided in paragraph (f). (See .) Program income includes but is not limited to income from fees for services performed, the use or rental or 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. See also . See also applies to inventions made under Federal awards.

Accrual of Program Income

The accrual of program income requires prior sponsor approval. The discussion of program income normally occurs in the budget justification of the proposal and typically includes an explanation of how the program income will be generated, an estimate of how much program income is expected and the planned disposition of the program income.

Additionally, anticipated program income should be declared on the internal Transmittal eform (completed in InfoEd during proposal development) by answering "yes" to the question, "Will there be any revenue associated with this project (e.g., collection of conference registration fees, sale of materials, fees for services, etc.)?"

Program income is earned during the period of performance of the sponsored activity. Any income earned after the period of performance is not considered program income and will not need to be accounted for with the sponsoring agency.

If earning income from a project was not anticipated at the proposal stage and discussed in the budget justification, then a request must be made to the sponsor to acquire approval of the program income prior to the actual accrual of any program income. The request will be made with the assistance of the pre-award research administrator assigned to the campus unit in which the proposal and/or award resides.

The University is required by sponsoring agencies to keep program income and award funds separate for accounting purposes. Therefore, during the processing of the award and account setup, a separate program income account will be established for the collection, spending and accounting of earned program income. The separate program income account will aid the post-award grant accountant in reporting the accrued program income.

Treatment of Program Income

When program income is earned on a sponsored project, the award terms and conditions typically dictate for what purpose the program income is to be used and whether the program income will be added to or deducted from the overall award amount. For awards made to institutions of higher education and nonprofit research institutions, if the sponsoring agency does not specify in its terms and conditions how program income is to be used, the addition method will apply, and the program income earned will be added to the award amount thereby increasing the overall award. If the sponsoring agency specifies in the award terms and conditions that program income is to be deductive, the sponsor will reduce the amount of the award by the amount of earned program income.

Use of Program Income

Program income must be used for the purpose stated in the award terms and conditions and should be spent within the award period of performance. Further, program income funds should be spent prior to spending award funds whenever possible. With prior sponsor approval, program income may be used to meet cost share or match requirements. If there is residual program income at the end of the period of performance, it may not be transferred to any other spending account, and instruction should be obtained from the sponsor regarding the treatment of unspent program income.