The University requires principal investigators to identify and document program
income on projects from both federal and non-federal sponsors. The nature of
this income must be appropriately documented and the resulting revenue properly
recorded. This income must be sent to Sponsored Financial Reporting (SFR) for
deposit into the appropriate account. This policy and its procedures address
the definition, management, reporting, and monitoring of program income in accordance
with federal and University requirements.
Exclusions
This policy does not include revenue generated through programs funded by sources
other than sponsored projects, for example performing arts programs funded by
private gifts.
This policy does not include non-reportable program income. Examples include
royalty income resulting from copyrights unless addressed in the award terms,
royalties or license fees for unpatented, but potentially patentable discoveries
that are disclosed to the Office of Technology Commercialization, and income
received on non-federal awards that are silent on program income.
Special Situations
Honoraria
Honoraria and fees earned from speaking engagements related to the sponsored program
are not considered as program income if they are paid directly to the investigator.
If the honorarium is paid to the University, then the sponsor might consider it
to be program income. Check with Sponsored Projects Administration.
Royalty Income
Royalties from copyrights, while defined as program income, are not reportable
unless the terms and conditions of the award indicate otherwise. Royalties resulting
from patents are program income but are reported following the University policy
on Reporting Inventions.
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 Circular A-110 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.
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.
- OMB Circular A-110:
- Office of Management and Budget Circular A-110, Uniform Administrative Requirements
for Grants and Agreements with Institutions of Higher Education, Hospitals,
and Other Non-Profit Organizations. 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 supported
activity or earned as a result of the award (OMB Circular A-110). Examples
of program income include:
- income from fees for services performed such as laboratory tests.
- money generated from the use, sale, or rental of equipment purchased
with project funds.
- proceeds from the sale of supplies or equipment purchased or fabricated
with project funds.
- proceeds from the sale of software, tapes, or publications.
- income from the sale of research materials such as animal models.
- fees from participants at conferences or symposia.
- sales of products with an accompanying material transfer agreement.
- royalties from patents and copyrights [see special situations].
Program income does not include:
- 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.
Note: while all program income must be sent to Sponsored Financial Reporting
for deposit, not all program income 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, and cooperative agreements for research, training, and other public
service activities.
- 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. Provide information regarding budget
categories for program income account establishment. Verify program income
on reports. At final project termination, address account balance issues.
Complete the External Sales Action Form if program income is generated after
the project ends.
- Department Administrator
- Invoice for product or service. For cash, deposit with Bursar and send Cash
Receipt to SFR (at coordinate campuses, handle checks in the same way as cash).
Verify program income receipt on financial reports on the web. Redistribute
program income revenue in spending categories. Monitor expenditure levels
in project to ensure that program income is spent first. Provide administrative
assistance to the principal investigator, including initiating collections
actions for unpaid invoices. Reconcile revenue invoiced or submitted to SFR
against University financial reports. Verify program income on sponsor financial
reports.
- Department Head
- Ensure that any activity that could generate program income is correctly
identified on the Proposal Routing Form. Monitor program income levels on
monthly financial reports.
- Dean
- Ensure that any activity that could generate program income is correctly
identified on the Proposal Routing Form. Monitor program income levels on
monthly financial reports.
- Office of Technology Commercialization
- Provide advice on Material Transfer Agreements to principal investigators
and departmental administrator on the sale of research materials.
- Sponsored Projects Administration
- Review proposal and PRF for anticipated program income. Determine whether
program income is reportable or non-reportable. If necessary, contact sponsor
to discuss anticipated program income. Correctly determine use of reportable
program income. Set up appropriate Revenue Source Code or program income account.
Complete Notice of Program Income and forward to PI, SFR, department, college,
certified approver, and External Sales. Monitor levels of program income in
account and any limits that are set by the sponsor.
- Sponsored Financial Reporting
- Deposit program income checks and prepare necessary budget documents. Monitor
spending to ensure program income is spent first. Report program income as
required by sponsor.
- External Sales
- Provide advice on proper pricing of sources of program income (e.g., fees
for conferences), sales tax compliance, and contract terms. At project termination,
handle revenue earned after the grant period has ended.
There is no FAQ for this policy.
- 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 nonreportable 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 nonreportable 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 nonreportable program income will be deposited in a separate
account with new Revenue Source Code 4950; Specified that nonreportable 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
-
To obtain a copy of a historical policy,
e-mail the U Policy Librarian at policy@umn.edu or call 612-624-4372.
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