Research Administration Policies

RA66 Program Income

Policy Status
Active
Subject Matter Expert
Jason Guilbeault, AVP for Research (Post-Award Contractual Compliance), 814-863-9330, jpg6569@psu.edu
Policy Steward
Senior Vice President for Research and Associate Vice President for Budget and Finance

Contents

PURPOSE:

To define general Federal policies that govern:

  • the definition of program income, and
  • the allowable uses and disposition of program income on Federally sponsored projects. The Federal regulations that govern program income are identified in OMB Uniform Guidance.

The Penn State procedure for managing and accounting for program income is detailed in Procedure RA2066 - Program Income.

Principal Investigators and Project Directors (PI/PDs) are responsible for reviewing their specific awards and consulting the guidelines of the sponsoring agency and the Uniform Guidance. They are also responsible for reporting any potential program income to the appropriate research administration staff for their unit (Research Coordinator or Financial Officer).

PROGRAM INCOME - DEFINITION:

Uniform Guidance 2 CFR 200.1:

Program income means gross income earned by the recipient or subrecipient 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 §200.307(c). Program income includes but is not limited to income from fees for services performed, the use or rental of real or personal property acquired under Federal awards, the sale of commodities or items fabricated under a Federal award, . . . 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 §200.407. See also 35 U.S.C. 200-212 “Disposition of Rights in Educational Awards” applies to inventions made under Federal awards.

PI/PDs shall apply the standards set forth herein in determining and accounting for program income related to projects financed in whole or in part with Federal funds.

Per 2 CFR 200.307, earning income to defray program costs is encouraged where appropriate. However, per 2 CFR 200.313(c)(3), Penn State "must not use equipment acquired with the Federal award to provide services for a fee that is less than a private company would charge for similar services unless specifically authorized by Federal statute." 

UTILIZATION OF PROGRAM INCOME:

According to Uniform Guidance 2 CFR 200.307(b), program income must be added to the Federal award (unless otherwise specified by the Federal awarding agency or by the terms and conditions of the Federal award). The program income must be used for the purposes and under the conditions of the Federal award.

PROGRAM INCOME OUTSIDE OF PROJECT PERIOD:

Unless Federal awarding agency regulations or the terms and conditions of the award provide otherwise, recipients shall have no obligation to the Federal Government regarding program income earned after the end of the project period.  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 (Uniform Guidance 2 CFR 200.307(c)).

DEDUCTING COSTS:

If authorized by Federal regulations or the Federal award, costs incidental to the generation of program income may be deducted from gross income to determine program income, provided these costs have not been charged to the Federal award (Uniform Guidance 2 CFR 200.307(d)).

ROYALTIES AND LICENSE FEES EXCLUSION:

Even though the Uniform Guidance references "license fees and royalties on patents and copyrights" as potential sources of program income, this does not apply to colleges and universities unless specified in the terms and conditions of the Federal award (Uniform Guidance 2 CFR 200.307(e)(3)).

SALE OF PROPERTY:

Proceeds from the sale of real property, equipment, or supplies are not program income; such proceeds will be handled in accordance with the requirements of the Property Standards of 2 CFR 200.311 Real property, 2 CFR 200.313 Equipment, and 2 CFR 200.314 Supplies, or as explicitly identified in Federal statutes, regulations, or the terms and conditions of the Federal award (Uniform Guidance 2 CFR 200.307(e)(2)). See Policy RA70 – Property & Equipment and Policy BS15 – Disposal and Purchase of Obsolete, Surplus or Scrap University-Owned Equipment, Supplies and/or Materials.

FURTHER INFORMATION:

For questions, additional detail, or to request changes to this policy, please contact the Office of the Senior Vice President for Research or the Office of Budget and Finance.

CROSS REFERENCES:

Other Policies and Procedures in GURU may also apply, especially:

BS15 - Disposal and Purchase of Obsolete, Surplus or Scrap University Owned Equipment, Supplies and/or Material

RA2066 - Program Income

Revision History:

  • April 25, 2024 - Updated links to RA2066 (Program Income), which replaced FN2070
  • February 2, 2025 - Updated to reflect change of SME to AVP for Research (Post-Award Contractual Compliance)
  • October 20, 2024 - Updated to reflect editorial changes to 2 CFR 200, effective October 1, 2024
  • September 1, 2024 - Updated links to FN2070 (Program Income), which replaced CR2070
  • November 28, 2020 - Updated to reflect UG revision
  • September 18, 2019 - Changed Vice President for Research to Senior Vice President for Research
  • February 26, 2016 - This new policy (incorporating parts of RA09) has been created as part of the policy reorganization brought about by implementation of the Uniform Guidance (2 CFR 200).
  • March 7, 2005 - Editorial changes to correct links
  • February 20, 1998 - (Reformatted for GURU from OSP, dated September 1994. RA09)
Date Approved
Date Published
Effective Date