PROGRAM INCOME
What is program income?
Program income can be defined as income earned by the University that is
directly generated by a sponsored activity or earned as a result of an award.
In summary, if a product or service is developed during the course of a
sponsored award and the development of that product or service was funded by
a sponsoring agency, then the net income received is considered program
income.
Determining whether a project will generate program income depends on selfdisclosure by the principal investigator (PI) at the time of the proposal
submission. There may be cases when program income is not anticipated during
the proposal preparation process and arises out of opportunities that occur
during the life of the award. In these situations, the principal investigator is
responsible for working with the Office of Sponsored Programs and Contract and
Grants (C&G) so that the situation can be properly tracked and reported to the
funding agency.
POLICY STATEMENT
The University requires principal investigators to identify and document program
income on projects from both federal and non-federal sponsors. The nature of
this income must be appropriately documented and the resulting revenue
properly recorded. The monies generated should be forwarded directly to the
Controller’s Office for deposit into the appropriate account.
PROCEDURE
In summary, program income involves the following:
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Principal Investigator identifies program income activity.
Program income project is established by the Office of
Sponsored Programs (OSP).
Principal Investigator communicates receipt of program
income.
Revenue is received and deposited into the program
income account.
Contracts and Grants report the program income on the
financial reports.
The procedure below contains detailed steps needed to correctly identify and
record program income.
Step 1
Identify revenue-generating activities
The principal investigator is responsible for identifying actual and potential
program income at the proposal stage and contacting the Office of
Sponsored Program (OSP) to discuss how the revenue will be used and
recorded in the budget.
Common types of program income are fees from conferences and the sale
of pamphlets or conference materials. Other examples include:
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Step 2
Income from fees for services performed such as laboratory tests.
Fees from participants attending conferences or symposia.
Income generated from the use, sale, or rental of equipment
purchased or fabricated with project funds.
Proceeds from the sale of excess supplies or equipment purchased
or fabricated with project funds.
Sale of software, tapes or publications.
Income from the sale of research materials such as animal models.
Sales of products with an accompanying material transfer
agreement.
Answer 'yes' to question on Proposal Transmittal Form (Division
of Research website) regarding program income
If the principal investigator believes that program income will be generated
during the project, he or she must answer ‘yes’ to the related question on
the proposal transmittal form (PTF).
Step 3
Plan for using program income
OSP reviews sponsor regulations to determine the appropriate agency
requirements. All principal investigators should be aware of how program
income will be used and reported due to a possible impact on the scope of
work of the award.
Program income must be utilized in a manner that is allocable, allowable,
and reasonable to the project. Expenses that are unallowable on the main
project account are also unallowable on the program income account.
Exceptions may be costs incurred that are incidental to the generation of
program income.
F&A costs will be charged to program income accounts at the same rate
applied to the sponsored agreement that generates the income. F&A costs
should also be included when determining the registration fee or prices of
materials, etc.
***How program income can be used:
Program income revenue can be handled in one of four ways, depending
on the sponsor’s policies:
1. Matching Method- Program income is used to finance the nonsponsor or non-federal share of the project.
2. Additive Method- Program income is added to the amount
allowable for project costs.
3. Deductive Method – Program income is deducted from the
amount reimbursed by the sponsor.
4. Add/Deduct Method - The addition method is used up to an
agency dollar limit. After that point, the deduction method is used.
*****Example: A sponsor awards $100,000 for a project. The project
generates an income of $30,000.
o Matching Method: If the University were required to supply
matching funds, e.g., $50,000, the University would now have to
provide $20,000.
o Additive Method: The total project cost could be $130,000.
o Deductive Method: The sponsor will now only fund $70,000 of the
project's costs.
o Add/deduct Methods: If the sponsor limit is $25,000, the amount
of $25,000 will be added to the total project cost, but $5,000 will be
deducted from the sponsor's payment to reduce it to $95,000. The
total amount available is $125,000.
Step 4
Generate the program income
When program income is generated, the PI documents the activity that
generated the income (e.g., sales of goods or services, etc.) and instructs
the buyer/attendee where to send payments. Appropriate records should
be maintained by the PI.
Step 5
Invoice for the product or service
All monies collected should be forwarded directly to the Controller’s Office
for deposit. The PI should maintain documentation that shows evidence
of:
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Step 6
Receipts given to buyers, attendees, etc.
Goods or services that generated the income.
Number of units sold and unit cost.
Information identifying the buyers, attendees, etc.
Chartfield combination (DeptID, Fund, Project) to which the
funds were deposited.
Receive program income
Any checks not made payable to Florida A&M University will be returned.
If payments are erroneously received by the principal investigator or
department, the checks/money orders must be forwarded to the
Controller’s Office for deposit. See attached deposit form.
***Receipt of program income:
In cases when the program income was not identified at the proposal
stage, the PI should notify the Office of Sponsored Programs for the
establishment of the program income project. The program income project
will be a subproject under the same PeopleSoft award/contact as the
sponsored project. OSP will inform the PI of the treatment method to be
applied and the chartfield combination (DeptID, Fund, Project) to use
when spending the program income funds.
The budget for program income should mirror the amount of funds
deposited into the program income account. Therefore, an amendment
request should be forwarded to OSP for every deposit that is forwarded to
the Controller’s Office for processing. The PI should forward copies of
checks and an amendment request. The program income budget will
only increase upon the processing of amendments by OSP.
Step 7
Monitor program income
The principal investigator should monitor the receipt and recording of
program income. If the Principal Investigator believes that program
income has been generated and deposited but is not appearing on the
project, he or she should contact OSP or Contracts and Grants to track
the revenue and resolve any discrepancies.
Step 8
Report program income
Contracts and Grants reports program income to the sponsoring agency
via the financial reports.
***PROJECT CLOSEOUT:
Any residual program income funds are to be handled according to the
terms and conditions of the award. Unless the federal awarding agency
regulations or the terms and conditions of the award state otherwise,
recipients shall have no obligation to the federal government regarding
program income earned after the end of the project period.
RESPONSIBILITIES
Principal Investigator
o Identify sources of actual and potential program income at the
proposal stage and mark 'yes' to the program income question on
the Proposal Transmittal Form.
o Develop a plan for using program income.
o Complete required program income sections in agency application.
o Contact OSP to discuss potential program income and whether it is
reportable to the sponsor.
o Maintain all documentation related the program income generating
activity.
o Invoice for product or service.
o Deposit all program income related monies into the appropriate
project.
o Reconcile (verify receipt) with the University’s financial records.
o Initiate budget amendments to increase program income budget.
o At final project termination, address any outstanding fees or
collections.
o Request any approvals needed to retain any program income
residuals.
Department Head
Ensure that any activity that could generate program income is correctly
identified on the Proposal Transmittal Form.
Dean
Ensure that any activity that could generate program income is correctly
identified on the Proposal Transmittal Form.
Office of Technology, Licensing & Commercialization
Provide advice on Material Transfer Agreements to principal investigators
on the sale of research materials.
Office of Sponsored Programs (OSP)
Review proposal and RFP for anticipated program income. Determine
whether program income is reportable or non-reportable. If necessary,
contact sponsor to discuss concerns or questions. Correctly determine
use of reportable program income. Establish appropriate program income
account/project. Monitor levels of program income and any limits that are
set by the sponsor.
University Controller’s Office
Deposit and record program income payments.
Office of Contracts and Grants
Monitor spending to ensure program income is expended first. Report
program income as required by sponsor.
Contact Information:
Subject
Proposal Preparation
Contact
Phone
Office of Sponsored
599-3531
Programs
______________________________________________________________
Account Information
Office of Sponsored
599-3531
Interpretation of Award Terms
Programs
& Conditions
Project Information
Amendments/Modifications
_______________________________________________________________
Fiscal Reporting
Contracts and Grants
412-5067
Award Close-out
Time & Effort Reporting