Printed on: 06/16/2025. Please go to policy.umn.edu for the most current version of the document.
University of Minnesota  Administrative Policy

Managing Program Income Earned on Sponsored Projects

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Policy Statement

Principal investigators (PIs) must identify and appropriately document program income generated on all sponsored projects in accordance with sponsor requirements.

Reportable program income revenue will be applied to the sponsored project in one of four ways, depending on the sponsor and award terms and conditions:

  • Matching - income is used to finance the non-sponsored share of the project.
  • Addition - income is added to the amount provided by the sponsor for project costs.
  • Deduction - income is deducted from the amount that will be covered by the sponsor.
  • Add/Deduct - the addition method is used up to a sponsor dollar limit. After that point, the deduction method is used.

Non reportable program income is handled according to Administrative Policy: Selling Goods and Services to External Customers [see "exclusions" in policy].

In all cases, program income is spent before the sponsor's portion is invoiced.

Exclusions

This policy does not include program income where there is no reporting requirement to the sponsor. Examples include income received on non-federal awards that are silent on program income, royalty income resulting from patents and copyrights (unless the terms and conditions of the award indicate otherwise - see Office of Budget and Management (OMB) Uniform Guidance 200.307), or royalties or license fees for unpatented, but potentially patentable discoveries that are disclosed to the Office for Technology Commercialization.

This policy does not include revenue generated through programs funded by sources other than sponsored projects.

Special Situations

Sale of Capital Equipment Purchased with Sponsored Funds

In certain situations the sale of capital equipment purchased with federal sponsored funds must be treated like Program Income unless otherwise dictated in the award documents. Refer to Administrative Procedures: Capital Equipment Disposals: Selling Capital Equipment Purchased with Sponsored Funds (does not include NSF Grants, NIH Grants and Non-Federal Grants) and Capital Equipment Disposals: Selling Capital Equipment Purchased with Sponsored Funds from NSF Grants, NIH Grants or Non-Federal Grants for specific criteria.

Exceptions to the policy

In consultation with each other, the Vice President for Research and Innovation and the Controller may grant exceptions to this policy based on written justification. To request an exception, the PI must submit the request and justification via email to these individuals.

Reason for Policy

Sponsors provide funding to cover costs of conducting research, training, and public service-related activities. Program income may be generated as a result of these activities and in some cases must be reported to the sponsor. OMB Uniform Guidance documents the explicit processes to be used in the identification, recording, reporting, and monitoring requirements for income that is generated during the project period.

To be consistent in managing program income, the University extends the federal requirements to nonfederal sponsors where it is reportable.

This policy was implemented to comply with sponsor terms and conditions and to ensure that program income is managed in a manner consistent with the University's overall missions and goals.

Procedures

Forms/Instructions

There are no forms associated with this policy.

Appendices

There are no appendices associated with this policy.

Frequently Asked Questions

  1. Which program income revenue application method is used?

    Federal sponsors: Individual agency policies determine how program income will be handled. However, most federal agencies specify that:

    • Research awards: the addition method will be used.
    • Non-research awards: the deduction method will be used.

    Note: In certain situations the sale of capital equipment purchased with federal sponsored funds must be treated like Program Income unless otherwise dictated in the award documents. Refer to refer to Administrative Procedures: Capital Equipment Disposals: Selling Capital Equipment Purchased with Sponsored Funds from NSF Grants, NIH Grants or Non-Federal Grants and Capital Equipment Disposals: Selling Capital Equipment Purchased with Sponsored Funds (does not include NSF Grants, NIH Grants and Non-Federal Grants) for specific criteria.

    Nonfederal sponsors: In many cases, the sponsor does not have an established program income policy and/or the sponsor is silent on this issue. In that case, the program income is handled according to Administrative Policy: Selling Goods and Services to External Customers (see "exclusions" in policy).

Contacts

Policy Contact Information
SubjectContactPhoneEmail
Primary ContactApril Coon
Nicole Pilman		612-624-7021
612-624-3848		[email protected]
[email protected]
Sponsored Billing QuestionsJill Neu612-624-8053[email protected]
External Sales QuestionsKeith Jansen612-624-5540[email protected]
Nonsponsored Billing QuestionsAccounts Receivable Services612-625-2392[email protected]
Responsible Individuals
Responsible Officer Policy Owner Primary Contact
  • Vice President for Research and Innovation
  • Controller
  • Director - Sponsored Projects Administration
  • Director of Sponsored Financial Reporting
  • April Coon
    Director - Sponsored Projects Administration
  • Nicole Pilman
    Director of Sponsored Financial Reporting

Definitions

Actual Program Income

Actual program income that is a part of the proposal or award budget.

MN-GEMS (Minnesota Grants Electronic Management System)

The University of Minnesota's grants management tool.

OMB Uniform Guidance

Uniform regulations that each federal agency are expected to follow regarding the administration of projects sponsored by the federal government. (In addition, each federal agency has its own regulations that are listed in the Code of Federal Regulations (CFR) and explained in its policy handbook (if it has one).)

Potential Program Income

Potential program income is additional funds that may be generated if there is an opportunity.

Program Income

Gross income earned by the recipient that is directly generated by a sponsored activity or earned as a result of the award (from OMB Uniform Guidance 200.80). Examples of program income include:

  • income from the collection of industry membership fees;
  • income generated from the use, or rental of equipment purchased or fabricated with project funds during the project period;
  • proceeds from the sale of software, CDs, or publications during the project period;
  • income from the sale of research materials such as animal models during the project period;
  • fees from participants at conferences or symposia during the project period;
  • sales of products with an accompanying material transfer agreement during the project period;
  • royalties from patents and copyrights [see special situations]; and
  • income from fees for service performed or use of resources such as laboratory tests during the project period.

Program income does not include for example:

  • patient care credits
  • interest earned on advances of federal funds
  • credits, discounts, rebates

Reportable Program Income

Program income earned on the award that must be reported to the sponsor.

Sponsored Project

An externally funded activity that is governed by specific terms and conditions. Sponsored projects must be separately budgeted and accounted for subject to terms of the sponsoring organization. Sponsored projects may include grants, contracts (including fixed price agreements), and cooperative agreements for research, training, and other public service activities.

Responsibilities

Accounts Receivable Services

Print and send program income invoices entered in EFS, apply payments to those invoices when received, and initiate collection actions for unpaid program income invoices.

Dean

Ensure that any activity that could generate program income is correctly identified on the MN-GEMS Funding Proposal (FP).

Department Administrator

Invoice for product or service generating the program income and deposit revenue according to University Administrative Policies and Procedures (Managing Billings to and Receivables from External Customers and Accepting and Depositing University Revenue). Verify receipt of program income on sponsored award. Provide administrative assistance to the principal investigator (PI).

Department Head

Ensure that any activity that could generate program income is correctly identified on the MN-GEMS Funding Proposal (FP).

External Sales Office

Provide advice on proper pricing of sources of program income to the PI. Assist with sales tax compliance and coordinating the establishment of contract terms. Monitor and provide oversight on revenue earned after the grant period has ended.

Office for Technology Commercialization (TechComm)

Provide advice on Material Transfer Agreements and on the sale of research materials to PIs and departmental administrators.

Principal Investigator (PI)

Identify sources of actual and potential program income at the proposal stage and mark 'yes' to the program income question on the MN-GEMS Funding Proposal (FP). Complete required program income sections in proposal application. Contact the Sponsored Projects Administration (SPA) Grants and Contracts Office (GCO) to discuss potential program income and whether it is reportable to the sponsor. Contact External Sales regarding pricing, tax, and contract terms for anticipated program income. Budget plan for using program income. Discuss anticipated program income with the department administrator. Verify program income on reports. At project closeout, address account balance issues. Complete the External Sales Activity Form if new program income is generated after the project ends.

Sponsored Financial Reporting (SFR) Accountant

Monitor Sponsored Unapplied Program Income Account. Move program income to sponsored project. Confer with SPA GCOA to determine the method of program income (Add/Deduct/Match) if that information isn’t included in the NOGA. Prepare and send the necessary information to the sponsor.

Sponsored Projects Administration (SPA) Grants and Contracts Officer (GCO)

Review proposal and MN-GEMS Funding Proposal for anticipated program income. Determine whether program income is reportable or non-reportable and note determination on the Notice of Grant Award (NOGA). Monitor level of activity on a regular basis.

Vice President for Research and Innovation and the Controller

Grant exceptions to this policy based on written justification from the PI.

Related Information

Related Policies

Other Related Information

History

Amended:

April 2025 - Comprehensive review, minor revisions. Made various grammatical edits to streamline policy and procedures-Updated language related to MN-GEMS implementation (ie PRF to FP)-Moved Reportable/Non reportable language from procedure to policy statement and added a related FAQ

Amended:

May 2021 - Comprehensive review, minor revisions.

  • Various grammatical edits to streamline policy and procedure.
  • Changed one of the policy owners and one of the policy contacts.
  • Added an "Exceptions to the policy" section.
  • Reformatted procedures so process flow is easier to understand.

Amended:

December 2016 - Comprehensive Review, Minor Revision. Minor grammatical changes and updated references to links. Also, added “Income from the collection of industry membership fees” as an example of program income to address confusion raised across U community.

Amended:

May 2016 - Comprehensive Review, Minor Revision. 1. Eliminates language that required sale of capital assets be treated like program income. 2. Adds language that references the specific capital equipment procedure that has criteria to determine when the sale of a capital asset purchased with sponsored funds is treated like program income.

Amended:

December 2014 - References to A-110 changed to OMB Uniform Guidance.

Amended:

June 2014 - Minor Revision, Comprehensive Review. Clarified that the policy is applicable to program income generated "during the project period", minor clarification in definitions and responsibilities sections. Added references to other related policies and procedures. In the associated procedures, incorporated "during project period" where applicable, moved paragraphs for flow, referenced other policies and EFS procedures for program income invoices and deposits, minor clarifications.

Amended:

June 2008 - Updated policy and procedures for EFS.

Amended:

December 2007 - Procedure 2.1.2.2 amended to include information on handling sales tax.

Amended:

January 2005 - Procedure 2.1.2.2 amended to include information on handling program income from internal sources.

Amended:

May 2003 - Reorganized and retitled procedures. "Identifying program income" is now "program income at proposal time" and "accounting for program income" is now "program income during the project period." Added new procedure for handling income at closeout. Added communication with External Sales. Clarified that non-reportable program income is excluded from this policy. Added step to invoice for product or service. Added invoice form as appendix. Added step for administrators to use NBUD to redistribute deposited revenue. Clarified that program income must be used before sponsor funds. Added monitoring and oversight responsibilities. Added appendix to explain principal investigator responsibilities.

Amended:

July 1999 - Clarified difference between reportable and non-reportable program income; Specified that a plan must be developed to handle program income earned on awards with nonfederal sponsors; Specified that a separate account for reportable program income may be established under certain circumstances; Specified that non-reportable program income will be deposited in a separate account with new Revenue Source Code 4950; Specified that non-reportable program income earned during the project period must be used to further the objectives of project; Specified that grant administrators must monitor the level of program income in sponsored accounts; Specified that a significant level of program income is considered the agency limit or 25% of the total award, whichever comes first; Developed a flowchart of the program income process. Added procedure: Identifying Program Income.

Draft Policy 2.1.2 - Accounting for Program Income From Sponsored Projects (10-30-95)

Effective:

October 1995