Program Income on Sponsored Awards, Procedure for

Purpose

To establish guidelines for faculty who have program income on federally sponsored research awards.

Covered Parties

This policy applies to any faculty with sponsored research funding.

Definitions

Program Income

Per Uniform Guidance, section 200.80, program income is defined as 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.

Program income includes but is not limited to:

• Income from fees for services performed, such as laboratory tests
• Conference/workshop registration fees
• The use or rental or real or personal property acquired under federal awards, such as fees charged for the use of computing or laboratory equipment
• The sale of commodities or items fabricated under a federal award
  • income from sales of educational materials
  • income generated from the sale of software, digital media, or publications
  • income generated from sales of research materials, such as tissue cultures, cell lines, and research animals
• License fees and royalties on patents and copyrights
• Principal and interest on loans made with federal award funds

Program income does not include:

• Interest earned on advances of federal funds
• 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

University Policy

Program income is earned income that is directly generated by a supported 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 award.

Program income revenue may be accounted for in one of three ways per Uniform Guidance section 200.307. It should be noted that if the federal awarding agency does not specify in its regulations or the terms and conditions of the federal award, or give prior approval for how program income is to be used, the additive method must be applied.

Deduction Method

Program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the federal awarding agency authorizes otherwise. Program income that Boston University did not anticipate at the time of the federal award must be used to reduce the federal award and Boston University entity contributions rather than to increase the funds committed to the project.

Additive Method

With prior approval of the federal awarding agency, program income may be added to the federal award by the federal agency and Boston University. The program income must be used for the purposes and under the conditions of the federal award.

Cost Sharing or Matching

With prior approval of the federal awarding agency, program income may be used to meet the cost sharing or matching requirement of the federal award. The amount of the federal award remains the same.

Process

In most cases, a separate account should be established to house program income. This allows Sponsored Programs Post Award to submit reports with program income, auditors to review program income for compliance with regulations, and allows PI/PDs to utilize their program income funds (where allowable) to maximum advantage. Whether a separate account is created or not, the following are minimal expectation of PI/PDs and departmental administrators with respect to program income:
PI/PDs are responsible for the following:

• Identifying sources of actual and potential program income at the proposal stage.
• Completing required program income sections in the grant proposal as necessary.
• Developing a plan for using program income.
• Discussing anticipated program income with the departmental administrator.
• Verifying program income on reports, working with SP Post Award RA.
• Addressing account balance issues at final project termination.

Departmental administrators are responsible for the following:

• Assisting PI/PD in calculating prices. Service Center Administration is available to assist you in this process.
• Billing for products or services which produce program income. All invoices should be submitted through Miscellaneous Receivables.
• Monitoring open receivables to ensure all program income billed is received.
• Monitoring levels of program income in the account and any limits that are set by the sponsor.
• Properly depositing income received in accordance with the University’s revenue policy.
• Monitoring expenditure levels.

Sponsored Programs Post Award with Research Financial Operations is responsible for tracking and reporting program income to sponsors.

Program income accounts, when set up on a grant with a separate IO, are linked to the program income fund. When program income revenue is received, the amount should be credited to either General Ledger Account 460020 (additive program income) or General Ledger Account 460030 (deductive program income). Sponsored Programs Post Award is responsible for updating program income budget to reflect revenue received.

There are no federal requirements governing the disposition of income earned after the end of the period of performance for the federal award, unless the federal awarding agency regulations or the terms and conditions of the federal award provide otherwise. The federal awarding agency may negotiate agreements with recipients regarding appropriate uses of income earned after the period of performance as part of the grant closeout process.

Responsible Parties

Related Policies and References

Uniform Guidance Sections 200.80 and 200.307(e)

History

This procedure was adopted in June 2018; Updated February 2022.