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Program Income

Program income is income earned by the recipient that is directly generated by a supported activity or earned as a result of a federally-funded award. Program income includes, but is not limited to, fees for services performed, use or rental of property acquired under an award, sale of commodities or items fabricated under an award, license fees and royalties on patents and copyrights, and interest on loans made with award funds. Except as provided in awarding agency regulations or the terms and conditions of the award, program income does not include the receipt of principal on loans, rebates, credits, discounts, etc., or interest earned on any of them.

To the extent possible, recipients should spend program income funds before requesting additional cash payments from the sponsor.

Program income generated during the project period shall be maintained by the awardee and, in accordance with awarding agency regulations or the terms and conditions of the award, should be used in one or more of the following ways:

  1. Additive method: Added to the funds committed by the awarding agency to further eligible project objectives
  2. Matching method: Finance the non-federal share of the project
  3. Deductive method: Deducted from the total project allowable cost in determining the net allowable costs on which the federal share of costs is based

In the event that the awarding agency does not specify how program income is to be used, the deductive method is automatically applied to all projects except research. For awards that support research, the additive method is automatically applied unless the awarding agency indicates otherwise. When an agency authorizes the disposition of program income as additive or matching, program income in excess of any limits stipulated should be used in accordance with the deductive method.

Unless the awarding agency provides otherwise, recipients have no obligation to the federal government regarding program income earned after the end of the project. If authorized by the awarding agency, costs incident to the generation of program income may be deducted from gross income to determine program income, unless these costs have been charged to the award.

Unless the awarding agency provides otherwise, recipients have no obligation to the federal government for program income earned from license fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions produced under an award. However, Patent and Trademark Amendments (35 U.S.C. 18) apply to inventions made under an experimental, developmental, or research award.

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