Examples
Worked examples
- Is an instance
A university core imaging facility, purchased with federal award funds, charges outside investigators a per-scan usage fee -- the fees collected are program income.
- Is an instance
A federally funded project develops a novel cell line or curated dataset and later sells or licenses it to other researchers or a company -- the resulting revenue is program income.
Counter-examples
Looks similar, but isn't
- Not an instance
Proceeds from selling equipment purchased under the award once the project ends are not program income -- equipment disposition is governed separately under 2 CFR 200.313.
- Not an instance
General tax revenue, fines, or other governmental revenue a recipient collects in its own governmental capacity is not program income unless a Federal statute, program regulation, or the award terms specifically say otherwise.
Editorial commentary
Program income is gross income earned by a non-Federal entity (a grant recipient or subrecipient) that is directly generated by a federally supported activity, or earned as a result of the Federal award, during the award’s period of performance. It is defined and governed by 2 CFR 200.307, part of Subpart D (Post-Federal Award Requirements) of the OMB Uniform Guidance.
Program income is distinct from the award funds themselves: it is money the project generates while it runs, not money the funder disburses. Because it was made possible by federal support, Uniform Guidance requires it to be applied back to the original purpose of the award rather than treated as unrestricted institutional revenue.
What counts as program income
A recipient generates program income when a federally funded activity produces its own revenue stream. Two common examples in a research setting:
- Fees for services performed using award-funded equipment. A core facility or instrument purchased or maintained with award funds charges outside users a per-sample or per-hour usage fee. Those fees are program income because the service could not have been offered without the federally supported activity.
- Sale of research materials or data developed under the award. If a funded project produces a reagent, cell line, dataset, or other tangible research product that the recipient then sells or licenses to third parties, the resulting revenue is program income.
Other recognized categories under 2 CFR 200.307(a) include conference or workshop registration fees charged by a federally funded event, and interest earned on program income itself (which is also treated as program income, not as interest on federal cash advances).
What is not program income
Two categories are commonly and incorrectly assumed to be program income:
- Proceeds from disposing of real property, equipment, or supplies acquired under the award are not program income — their disposition is governed separately (equipment disposition falls under 2 CFR 200.313, not 200.307).
- General governmental revenue a recipient raises in its own capacity — taxes, special assessments, levies, fines, and similar revenue — is not program income unless a Federal statute, program regulation, or the award’s own terms and conditions specifically say otherwise.
The three methods of applying program income
2 CFR 200.307(e) sets out three ways a recipient may be required to apply program income, and specifies which method applies when the awarding agency’s regulations or the award’s terms and conditions are silent:
- Deduction (the general default). Program income is subtracted from total allowable project costs, so the net effect is a smaller draw against the Federal award. For most non-Federal entities, deduction applies automatically whenever the agency has not specified a different method.
- Addition (default for institutions of higher education and nonprofit research institutions). Program income is added to the funds already committed to the award, increasing the total resources available for the project’s original scope. Uniform Guidance carves out a specific, favorable default here: for awards made to institutions of higher education (IHEs) and nonprofit research institutions, addition — not deduction — applies automatically when the agency hasn’t specified a method, without the prior approval that addition otherwise requires for other recipient types.
- Cost sharing or matching. Program income is counted toward the recipient’s required cost-share or matching commitment on the award, when the award has one. This method only applies when the awarding agency’s regulations or the specific award terms designate it.
Because the applicable method depends on both the recipient type and what the specific award’s terms and conditions say, research administrators should confirm the method in the notice of award rather than assume a single rule applies across every federal grant an institution holds.
Why this matters for grant financial reporting
Program income earned during the period of performance generally must be used for costs incurred during that same period (or allowable closeout costs), and — where deduction or addition applies — it factors directly into how much a recipient draws down against the award. It is reported to the awarding agency on the SF-425 Federal Financial Report, which has a dedicated program income section. Recipients should also track program income through the same cost allocation and internal-control processes used for other award funds, since auditors reviewing a Single Audit will test whether program income was applied using the method actually specified for that award.
Related terms and guides
Machine-readable encodings
Use in your systems
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