16.4.1 Identify, Account, Treat, and Report Program Income
Policy Statement
The University of Illinois System is required to identify, document, and report program income generated on sponsored programs in accordance with the federal administrative requirements, awarding agency regulations and terms and conditions of the awards. When a reporting requirement exists, the system must track program income earned during the project period, in accordance with the awarding agency regulations or the terms and conditions of the award. Read more on the Program Income policy main page.
Before Beginning
Office of Management and Budget (OMB) Uniform Guidance 2 CFR Part 200 set forth specific requirements for the identification, accounting, treatment, and reporting of income generated from a federal sponsored project during the project period. The system has extended these requirements to income generated on all sponsored programs as noted under Applicability of the Policy, on the Program Income policy main page.
Begin
Follow these guidelines to identify, account, treat, and report program income.
| Treatment |
Description |
Example |
| Addition Method (default method unless specified otherwise in the federal awarding agency regulation or terms and conditions of the award) |
Program income is added to funds committed to the program and used to further program objectives. |
The initial project budget was $100,000; $10,000 of program income is generated. The total project costs may now be $110,000. ($100,000 expensed on the parent fund and $10,000 expensed on the program income sub-fund.) |
| Deduction Method |
Program income is deducted from total allowable costs of the program to determine the net allowable costs attributable to the federal share. |
The initial project budget was $100,000; $10,000 of program income is generated. The adjusted project budget amount from the awarding agency is reduced to $90,000 after gross program income is taken into account. Total project costs remain at $100,000. ($90,000 expensed on the parent fund and $10,000 expensed on the program income sub-fund.) |
| Cost Sharing or Matching Method |
With prior approval of the federal awarding agency, program income may be used to meet the cost sharing or matching requirement of the federal award. |
The initial project budget was $100,000 with cost sharing committed at $20,000. $10,000 of program income is generated. The expenditure of the program income may be used to account for $10,000 of the committed cost sharing. |
| Combination |
Regardless of the initial method used for program income, any program income in excess of the amount specified at the time of the federal award must be administered using the Deduction Method. Thus, there may be a combination of methods used for program income generated on the same project. |
The initial project budget was $100,000. While only $25,000 of program income was anticipated at the time of award, $35,000 of program income is generated on the project. If the project was initiated under the Additive Method, only the first $25,000 may be added to the award, bringing the award to $125,000. The amount In excess of $25,000 [$10,000] is deducted from the new award amount. Thus, the award amount is: $100,000 + $35,000 - $10,000 = $125,000 ($90,000 agency funds plus $35,000 program income). |
1. Identify and Communicate Program Income at the Proposal Stage
The Principal Investigator (PI) or designee is responsible for identifying whether any program income will be generated during the project period, and completing the proposal based on funding agency guidelines. A PI needing further guidance should contact the applicable university pre-award office.
2. Account for Program Income and Expense
The system will account for program income in a secondary fund associated with the grant code established for the sponsored award. Both the program income revenue and related expenses must be recorded to the program income fund with the intent of utilizing the income by the end date of the award. If unexpended program income remains at the end of the award, disposition of the funds must follow awarding agency guidelines.
3. Treat Program Income
Program income generated with funds from a sponsored project and earned during the project period will be used to support the sponsored project that produced the income.
Regardless of the method that is applied, program income may be used only for allowable costs in accordance with the applicable cost principles and the terms and conditions of the award. The chart above outlines the different methods for the treatment of program income.
4. Report Program Income
When required to report program income, the system must do so in accordance with the terms and conditions of the award. The sponsored programs office will work with PIs and unit business managers to complete and submit reports in a timely manner.
Additional Resources
16.4.2 What is Program Income?
16.4.3 Program Income Responsibilities
16.4 Frequently Asked Questions
Uniform Guidance 2 CFR 200.307
First Published: March 2021 | Last Updated: March 2024 | Last Reviewed: March 2024