1. DGCA Breakfast Briefing Program Income

2. What is Program Income? OMB Circular A-110 defines program income as:
Gross income earned by a recipient that is directly generated by a sponsored activity or earned as a result of an award
Program income is the property of the sponsor and is to be accounted for in accordance with the terms and conditions of the sponsored award
The University requires Principal Investigators to identify and document program income on sponsored programs from both federal and non-federal sponsors
The nature of the income must be appropriately documented and the resulting revenue and expenses properly recorded and accounted for.

3. Some Examples of Program Income
Fees earned from services performed under the project, such as laboratory tests
Funds generated from the sales of research materials, such as tissue cultures, cell lines and research animals
Conference fees charged when a grant funds the conference
Income from registration fees, consulting and sale of educational materials
Sale, rental or usage fees such as fees charged for the use of computing and laboratory equipment purchased with grant funds

4. Program Income Accounting
Revenue is accounted for in 1 of 4 ways (OMB Circular A-110) depending upon sponsor policies
Additive Method
Deductive Method
Matching Method
Add/Deduct Method
REGARDLESS OF THE ACCOUNTING METHOD USED:
PROGRAM INCOME MAY ONLY BE USED FOR ALLOWABLE COSTS IN ACCORDANCE WITH THE APPLICABLE COST PRINCIPLES AND THE TERMS AND CONDITIONS OF THE AWARD

5. Additive Method
Program income funds are added to the funds committed to the project by the sponsoring agency and used to further eligible project or program objectives.
Example: Initial project budget from sponsor was $100,000
Program income generated was $20,000
Total project costs may now be $120,000
$100,000 would be expensed on grant/contract account
$ 20,000 would be expensed and recorded in separate program income account established in Grant & Contract accounting for this award.

6. Deductive Method Program income generated is $20,000
Program income funds are deducted from the total project or program allowable costs to determine the net allowable costs on which the sponsor’s share of costs is based.
Example: Initial project budget was $100,000
Program income generated is $20,000
Adjusted project budget from the sponsor is reduced to
$80,000 after gross program income is taken into account.
Total project costs remain at $100,000
$80,000 would be expensed on grant/contract account
$ 20,000 would be expensed and recorded in separate program income account established in Grant & Contract accounting for this award.

7. Matching Method
Program income funds are used to finance the non-sponsor share of the project or program (mandatory or committed cost sharing)
EXAMPLE: The initial project budget was $100,000 with cost sharing committed at $20,000.
$10,000 of program income is generated
The expenditure of the program income may be used to account for $10,000 of the committed cost-sharing.

8. Add/Deduct Method
A portion of the program income is added to the funds committed to the project as specified by the awarding agency, any remaining program income funds are deducted from the total funds available for the project
EXAMPLE: Initial award from sponsor was $100,000
$35,000 of program income is earned and the sponsor allows the first $25,000 to be added to the award bringing the total award to $125,000
The amount in excess of $10,000 is deducted from the new award amount. Thus, the award amount is $125,000 ($100,000 + $35,000 - $10,000)
=$90,000 in sponsor funds + $35,000 in program income

9. Federal Awards
In the event the agency does not specify in its regulations or terms and conditions of the award how the program income is to be treated, the following applies: Research Awards: If the award is silent, the Additive method generally applies and is the default method. Non-Research Awards: If the award is silent, the Deductive method generally applies and is the default method

10. Non-Federal Awards
Income generated through non-federal awards or fixed price contracts is handled according to the specific sponsor rules as defined in the award document If the sponsor is silent, the income is not reportable

11. Program Income Generated DURING the Award Period
Principal Investigators/Admin Unit are responsible for contacting DGCA to discuss activity that will generate program income and its relationship to the grant or contract.
Unless specified otherwise in the award, federal regulations (OMB Circular A-110) require the University to expend program income funds BEFORE spending sponsor funds
Funds remaining in the program income account after the project has terminated will be returned to the sponsor.

12. Accounting for Program Income Generated AFTER the Award Period
Unless agency regulations or award terms and conditions specify otherwise, there is no obligation to the sponsor for program income EARNED after the end of the award period
Note: Income EARNED during the award period BUT received up to 60 days after the end of the award period must be considered program income and treated in accordance with the guidelines discussed earlier
External sales of goods or services after the award termination must be accounted for in a new recharge center established
Sales to external customers outside the University may be subject to UBIT. For further guidance, please confer with University’s tax department

13. Establishing Program Income Accounts
If a new sponsored award is received which clearly indicates program income is expected to be generated, DGCA will establish a separate program income when establishing a GL account for the sponsored award If not established, it is the responsibility of the PI/Administering unit to contact DGCA to establish one when program income is received or is expected A separate program income account must be established for each sponsored award it relates to and not commingled

14. PI/Administering Unit Responsibilities
Ensure that any expenditures charged to a program income account are allowable in accordance with sponsor and RU policies If revenue is generated after the award has ended, the PI/Unit must request a new separate account to record future activities Ensure all program income activities rendered are billed (within 30 days) and receivables collected timely and that they are recorded in the appropriate program income account Ensure these guidelines are adhered to for any consortium agreements under RU awards

15. Questions, Comments or Feedback?
Please forward to
DGCA