GAP 200.290, Program Income - Federal Grants and Contracts

Contents

1. Purpose
2. Definitions
3. Use of Program Income
4. Reporting
5. Federal Regulations

I. Purpose

Sponsored projects conducted by non-federal entities, such as Duke University, are encouraged to earn income to offset program costs where appropriate. Most federal agencies require applicants to list estimated income (and source) on grant applications, but programs should consult award documents for details specific to their projects. Duke is required to report program income generated during the performance of an award, and all program income must be properly identified and booked by the department.

II. Definitions

Program Income: refers to the gross income generated through activities supported by the Federal award during the period of performance (2 CFR 200.80). 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 of real or personal property purchased with award funds.
• Funds generated by the sale of commodities, such as tissue cultures, cell lines, or research animals.
• Income earned from license fees and royalties for copyrighted material, patent applications, trademarks and inventions produced under an award.
• Principal and interest on loans made with award funds.
• Fees received to attend conference or workshop funded by a sponsored project.

If authorized by the sponsor, a project may deduct costs incidental to the generation of income from gross income, provided these costs have not been charged to the award. 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 after the end of the project period.
• Proceeds from the sale of real property, equipment, or supplies.

III. Use of Program Income

If the award agency does not specify in either its regulations or in the terms and conditions of an award, or give prior approval for how program income is to be used, Option 1 below (Addition model) applies to all program income generated by the award. These funds must be used to further project directives and in accordance with the terms and conditions of the award.

The federal agency may specify other program income uses. Refer to the terms and conditions of the award for information specific to the project. The three options for use of program income described in federal regulations are:

Income after the period of performance:
Unless specified in the terms and conditions of an award, there are no Federal requirements for use of program income earned after the period of performance. The Federal government may negotiate agreements regarding these funds as a part of the closeout process. Refer to GAP 200.180, Closeout of Sponsored Projects for further information about the project closeout.

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

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

For questions concerning the use of sub codes for Program Income, please contact the Campus Award Management Team or the Award Management Representative with the Office of Research Administration, as appropriate.

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 to Post Award Financial Management as to why the anticipated program income was not generated.

V. Federal Regulations

This GAP reflects the provisions of the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, 2 CFR Part 200, otherwise referred to as the Uniform Guidance (UG). The UG became effective as of December 26, 2014, and revised as of November 12, 2020, and all awards issued on or after this date must be managed in accordance with its provisions. It is important to verify the applicable regulations for an individual award, which 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.