GAP 200.290, Program Income - Federal Grants and Contracts

  1. Applicability
  2. General
  3. Use of Program Income
  4. Reporting

 


 

I. APPLICABILITY

Federal awards issued prior to December 26, 2014 should be managed in accordance with OMB Circulars A-21, A-110, and A-133. Federal awards issued on or after December 26, 2014 should be managed in accordance with 2 CFR Part 200: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (The Uniform Guidance). It is important to verify the appropriate regulations applicable to your award. Documentation of appropriate regulations may be found in the Award Notice issued by the funding agency.

These guidelines pertain to federally sponsored projects and should be used as guidance for all sponsors unless specifically addressed in a non-Federal sponsor’s policies and/or procedures.

This GAP supersedes previous GAP versions, Duke Policies, Guidelines, etc. Unless otherwise noted, this GAP applies to all sponsored projects, unless superseded by guidelines from Non-Federal sponsors.

 

II. GENERAL

Many federal agencies require applicants to list the estimated Program Income (and source) expected to be generated by the project on their grant application forms. Program Income is income earned by a grant recipient from activities which are supported by the direct costs of an award. It includes, but is not limited to:

  • Fees earned for services performed under the grant, such as those resulting from laboratory drug testing.
  • Rental or usage fees, such as those earned from fees charged for the use of computer equipment purchased with grant funds.
  • Third-party patient reimbursement for hospital or other medical services, such as insurance payments for patients where reimbursement occurs because of the grant supported activity.
  • Funds generated by the sale of commodities, such as tissue cultures, cell lines, or research animals.
  • Fees received to attend conference or workshop funded by a sponsored project.

Unless otherwise specified in the awarding agency regulations or the terms of the award, program income does not include:

  • The receipt of principal on loans, rebates, credits, discounts, or interest earned on these.
  • Interest earned on advances of federal funds.
  • Income earned from license fees and royalties for copyrighted material, patents, patent applications, trademarks and inventions produced under an award.
  • Income earned after the end of the project period.

 

III. USE OF PROGRAM INCOME

Per OMB Circular A-110 (Section .24, Program Income), program income is retained by the award recipient and used in one of the following ways:

Option 1

Added to funds committed to the project by the awarding agency and used to further project directives.

Option 2

Used to finance the non-federal share of the project or program.

Option 3

Deducted from the total project allowable cost in determining the net allowable costs on which the federal share of costs is based.

Agency regulations or the terms of the award normally specify the option to be used. If the awarding agency does not specify, the recipient selects the appropriate option based on the following:

  • For awards supporting research, Option 1 applies. The only exception to this rule is if a recipient is subject to special award conditions because of agency concerns about the recipient's ability to perform the research or manage federal funds.
  • For all other programs, Option 3 applies.

If an agency authorizes a recipient to use Options 1 or 2 but sets a dollar limit, any excess will be used in accordance with Option 3.

 

IV. REPORTING

The University is required to report program income generated during the performance of the sponsored project.  The steps indicated below must be followed to properly identify and report program income: 

  1. Through your pre-award office, request that a new sub code be established for “Program Income.”
  2. Deposit in the new sub code all program income generated by the sponsored activity using the following G/L accounts:
349400

Sundry Revenue:
Use when revenue is received from non-Duke sources

752500

Credit for Services Rendered:
Use when revenue is received from Departments

  1. Charge to the new sub code all expenses related to the sponsored activity that generated the program income.

If Program Income is estimated during the application process and is not recorded under G/L account 349400 or 752500, it is the department's responsibility to provide an explanation as to the Office of Sponsored Program as to why the anticipated program income was not generated.

 

Note: This guidance is administrative in nature and is not a cost reimbursement policy. Failure to comply may or may not result in adjustments of charges to the award. Noncompliance with this policy does not mean this cost is unallowable from an external perspective. Any adjustments of charges will be as required under applicable federal cost reimbursement principles. If a cost is removed from an award for any reason, whether or not related to this guidance, the cost will generally be charged to departmental funds.