Treatment of Program Income on Sponsored Project Accounts

Effective Date: Formalized January 1, 2008

Executive Summary

While most sponsored projects are entirely funded by awards made by the sponsors of those projects, some projects generate income as a by-product of the work performed under the project. Federal regulations refer to this as "program income", and set forth the alternatives for how that income is to be treated and accounted for. This policy communicates the accounting policy for program income earned on sponsored projects.

It should be noted that while this Policy is now being formally published in the Administrative Policy Library, the underlying provisions of the policy are not new, and have been effect for many years.

Reason(s) for the Policy

To insure that program income, where generated under a sponsored project, is accounted for in the manner prescribed by Federal regulations.

Primary Guidance to Which This Policy Responds

OMB Circular A-110: Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations

Responsible University Office & Officer

Office of the Controller
Cheryl Ross, Controller

  Revision History

Not Applicable

Who is Governed by This Policy

Principal Investigators

Departmental Administrators and other departmental staff

Who Should Know This Policy

• All persons governed by this Policy {see above}
• Deans, Directors and Departmental Chairs
• Office of Research Administration staff
• Office of the Controller staff

Exclusions & Special Situations

None.

Policy Text

In carrying out a sponsored project, certain projects generate program income. Program income includes, but is not limited to:

• (a) income from fees or service performed
• (b) income from the sale of pamphlets or written material
• (c) rental fees
• (d) proceeds from the sale of tangible property or items fabricated under an award.      

When a sponsored project generates program income, the treatment of that income must comply with Federal regulations. Those regulations generally provide three alternatives for accounting for program income:

• (a)    Additive, whereby the income is added to the funds committed to the project to further the objectives of the award,
• (b)   Matching, used to finance the non-federal share of the project, or
• (c)    Deductive, whereby the income is used to reduce the federal share of the funding of the project.

Each sponsoring agency has the discretion to select one of the three methods above. For both NIH and NSF, which comprise the two largest funders of Columbia sponsored projects, unless otherwise specified in the Notice of Award, program income is to be treated as Additive. For sponsored projects awarded by other agencies that result in program income, contact Research Administration for guidance.

If authorized by Federal awarding agency regulations or the terms and conditions of the award, costs incident 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 award.

Unless Federal awarding agency regulations or the terms and conditions of the award provide otherwise, there is no obligation to the Federal Government regarding program income earned after the end of the project period.

Finally, unless Federal awarding agency regulations or the terms and condition of the award provide otherwise, there is no obligation to the Federal Government with respect to program income earned from license fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions produced under an award. However, Patent and Trademark Amendments (35 U.S.C. 18) apply to inventions made under an experimental, developmental, or research award.