45.13 - Program Income on Sponsored Projects

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Last updated: July 2026

A. Purpose. This policy explains program income and the proper use, accounting, and reporting of program income at the University of Idaho (University). Sponsors provide funding to cover the costs of conducting research, instruction, training, and other sponsored activity related activities. The federal government requires grantees to supplement federal project funding or defray program costs when earning program income (see C-1). Program income from sponsored awards must be managed in accordance with the Code of Federal Regulations (2 CFR, §200), or such subsequent guidance as may become effective, which set out the processes to be used in the identification, use, recording, reporting, and monitoring of program income generated by sponsored projects.

B. Scope. This policy is applicable to all sponsored projects.

C. Definitions.

C-1. Program Income. Program income is revenue that is earned as a direct result of the sponsored activity during the period of performance of a sponsored project. The University applies the federal definition of program income from2 CFR §200.1.

Note that unless the awarding agency regulations or the terms and conditions of the award provide otherwise, recipients shall have no obligation to the sponsor regarding program income earned after the end of the project period (2 CFR §200.307).

  1. Examples of program income may include:
    • Fees for services performed, such as laboratory tests,
    • Money from the use, sale, or rental of equipment purchased with project funds,
    • Sale of supplies or items fabricated with project funds,
    • Sale of software, tapes or publications,
    • Sale of research materials, such as animals, models or reagents,
    • Fees from participants at conferences, meetings, trainings, and symposia, including registration fees,
    • License fees and royalties from patents and copyrights (unless the Federal statute, regulations, or terms and conditions for the award provide otherwise, the University is not subject to federal laws regarding income earned from license fees and royalties.) (2 CFR §200.307).
  2. Exclusions from program income may include the following:
    • Patient care credits,
    • Interest earned on advances of federal funds,
    • Receipt of principal on loans, credits, discounts, etc. or interest earned on them,
    • Taxes, special assessments, levies and fines raised by government recipients.

C-2. Methods for Use of Program Income. Funding agencies may elect to use one of three methods to handle program income: additive; cost share/match; and deductive (2 CFR §200.307). In the event that the awarding agency does not specify in its regulations or the terms and conditions of the award how program income is to be used, the additive method shall apply automatically to all projects. The following examples define and illustrate the three methods for handling program income:

Example: A sponsor awards $100,000 for a project. The project generates income of $30,000.

  • Additive. Program income is added to the funds committed to the project by the awarding agency and recipient and used to further eligible project or program objectives.

Example: The total project cost could be $130,000.

  • Cost Share/Match. Program income is used to finance the non-sponsored share of the project or program.

Example: If the University was required to match project funds in the amount of $50,000, the University would now only have to provide an additional $20,000, using the $30,000 in program income as part of the match. The sponsor would still pay $100,000.

  • Deductive. Program income is deducted from the total project or program allowable cost in determining the net allowable costs on which the sponsor’s share of cost is based.

Example: The sponsor will now only fund $70,000 of the total project costs. The sponsor will deduct the $30,000 in program income from the $100,000 original award.

In each of the above-listed examples the additional funds must be kept in a separate sponsored project program income restricted account and will be reported to the sponsor as required.

D. Policy. The Principal Investigator (PI), unit, and the Office of Sponsored Programs (OSP) each have specific responsibilities with regard to program income as follows:

D-1. Principal Investigators (PIs)/Units.

  1. Understand and abide by the University’s program income policies and procedures.
  2. Identify program income at the proposal stage or notify OSP if unanticipated program income is identified during the project.
  3. Follow the award terms and conditions and charge only allowable expenses to the program income account.
  4. Follow guidelines for disposition of program income.
  5. Submit close-out information for program income with the close-out information for the main award.

D-2. Office of Sponsored Programs (OSP).

  1. Help the PI determine whether program income will be generated under a specific sponsored project.
  2. Identify the method of use regarding program income.
  3. Establish the program income account at award setup or when program income is identified after setup.
  4. Ensure that all sponsor and award guidelines are applied to program income.
  5. Determine the program income reporting requirements and report program income to the sponsor.
  6. Confirm program income amounts with the unit.
  7. Assist unit in transferring program income balances, if appropriate.

E. Procedure. While the University’s procedure is based upon the federal definition and treatment of program income, all sponsored funding is subject to the following procedures:

E-1. Identifying Program Income. It is the responsibility of the Principal Investigator (PI) to identify sources of actual or potential program income at the proposal stage. For all proposals that include program income, the PI must:

  1. Check “YES” to the program income question at proposal submission and briefly indicate how the income will be generated.
  2. Provide additional details required by the sponsor in the proposal.

E-2. Recording Program Income.

  1. If program income question was checked “YES” at proposal submission OSP shall set up a separate program income account at the time the main funding is set up.
  2. If program income was not anticipated at the proposal stage of a project and the PI subsequently determines that he or she will begin to earn program income during an active project, the PI must identify the program income, notify OSP, request review of the sponsor guidelines, and initiate a request for set up of a program income account.
  3. If program income is identified as being earned during a project and was not reported to OSP, OSP must be notified to ensure proper accounting of these funds.

E-3. Accounting for Program Income.

  1. The unit/college is responsible for invoicing and/or receiving the program income. The unit/college must forward to OSP all program income funds received. Examples include payments accompanying a GRT form or initiating transfer of revenue from electronic collections systems. Upon receipt of these items and a budget breakdown, OSP will coordinate deposit of the funds and/or process an appropriate budget entry to reflect the income received.
  2. As expenses related to the project are incurred, the unit should, as much as is feasible, charge the expenses against the program income budget before charging expenses against the sponsored account (2 CFR 200.305). NOTE: Expenses that are unallowable (see APM 45.06) on the main sponsored account are not allowable on the program income account.
  3. Requirements for the retention of program income records are identical to those for the retention of records of sponsored program activities (APM 45.12): Source documentation must be retained by the unit for a period of three (3) years following final payment by the award sponsor, unless award indicates a longer retention period or there is an audit/litigation still in progress.

E-4. Monitoring and Reporting Program Income. (Reporting requirements are determined by sponsor terms or agency specific regulations.)

  1. OSP, with assistance from the unit, will ensure that all program income is identified and recorded properly in the correct account.
  2. OSP will verify that only allowable costs are charged to the program income fund.
  3. The OSP Financial Unit is responsible for reporting program income as required to the sponsor on any financial reports.
  4. Reporting and disposition of any residual program income funds will be in accordance with the requirements of the individual sponsor, but in general, excess funds will reduce the amount of the sponsor obligation unless otherwise required.

F. Contact Information. For questions or additional information about program income please contact the Office of Sponsored Programs at 208-885-6651 or osp@uidaho.edu.

Version History

July 2026. The update primarily reorganizes the policy into the current APM format by separating purpose, scope, and procedural elements and incorporates minor wording clarifications for improved readability. No changes were made to policy requirements, authority, or compliance expectations.

January 2018. Update to clarify policy and remove outdated information.

January 2012. Revised to clarify responsibilities.

January 2009. Delete section of E-3 relating to charging indirect costs on program income and revise section E-4 relating to residual program income funds. Other small changes, primarily related to how account is set up in Banner have also been made.

2005.