ADMINISTRATIVE POLICY

Managing Program Income Earned on Sponsored Projects

Responsible University Officer: Vice President for Research (Interim)
Responsible University Officer: Associate Vice President and Controller
Policy Owner: Associate Vice President for Research Administration
Policy Owner: Assistant Controller

POLICY STATEMENT

Principal investigators must identify and document program income generated on projects from both federal and non-federal sponsors in accordance with sponsor requirements. The nature of this income must be appropriately documented and the resulting revenue properly recorded.

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), 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.

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. Federal sponsors have documented in OMB Uniform Guidance and the applicable Code of Federal Regulations 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 requirements to nonfederal sponsors where it is reportable.

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

PROCEDURES

FORMS/INSTRUCTIONS

APPENDICES

FREQUENTLY ASKED QUESTIONS

CONTACTS

Subject Contact Phone Fax/Email
Primary Contact Kevin McKoskey
Nicole Pilman
612-624-5066 612-624-3848 kevin@umn.edu
npilman@umn.edu
Accounting Questions Jill Neu 612-624-8053 neuxx017@umn.edu
External Sales Questions Keith Jansen 612-624-5540 kkjansen@umn.edu
Billing Questions Accounts Receivable Services 612-625-2392 acctrec@umn.edu

DEFINITIONS

OMB Uniform Guidance
This document establishes uniform regulations for each federal agency 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).
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].
  • 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
"Actual" vs "potential" program income
  • Actual program income is a part of the proposal or award budget.
  • Potential program income is additional funds that may be generated if there is an opportunity.
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

Principal Investigator
Identify sources of actual and potential program income at the proposal stage and mark 'yes' to the program income question on the Proposal Routing Form. Complete required program income sections in application. Contact Sponsored Projects Administration 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. 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.
Department Administrator
Invoice for product or service 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 program income receipt on financial reports. Provide administrative assistance to the principal investigator.
Department Head
Ensure that any activity that could generate program income is correctly identified on the Proposal Routing Form.
Dean
Ensure that any activity that could generate program income is correctly identified on the Proposal Routing Form.
Office for Technology Commercialization (OTC)
Provide advice on Material Transfer Agreements to principal investigators and departmental administrators on the sale of research materials.
Sponsored Projects Administration (SPA)
Review proposal and Proposal Routing Form (PRF) 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.
Sponsored Financial Reporting (SFR)
Monitor Sponsored Unapplied Program Income Account. Move program income to sponsored project. Confer with SPA GA to determine the method of program income (Add/Deduct/Match) if the NOGA doesn't state.
External Sales
Provide advice on proper pricing of sources of program income. Assist with sales tax compliance, and coordinating the establishment of contract terms. Monitor and provide oversight to revenue earned after the grant period has ended.
Accounts Receivable Services
Print and send program income invoices, apply payments, initiate collection actions for unpaid program income invoices.

RELATED INFORMATION

Related Policies

Other Related Information

HISTORY

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
Document Feedback
Date Revised
December 2016
Date Effective
October 1995