In carrying out a sponsored project, certain projects generate program income. Principal Investigators and Departmental Administrators are responsible for identifying and accounting for program income throughout the life of a sponsored project. Program income includes, but is not limited to:
- (a) income from fees or service performed;
- (b) the use or rental of real or personal property acquired under Federal awards;
- (c) the sale of commodities or items fabricated under a Federal award;
- (d) license fees and royalties on patents and copyrights;
- (e) principal and interest on loans made with Federal award funds; and
- (f) income generated on another project, sponsored or otherwise, that benefits a sponsored project.
When a sponsored project generates program income, the treatment of that income must comply with Federal regulations. Those regulations generally provide three alternatives for accounting for program income:
- (a) Additive, whereby the income is added to the funds committed to the project to further the objectives of the award,
- (b) Matching, used to finance the non-federal share of the project, or
- (c) Deductive, whereby the income is used to reduce the federal share of the funding of the project.
Each sponsoring agency has the discretion to select one of the three methods above. For both NIH and NSF, which comprise the two largest funders of Columbia sponsored projects, unless otherwise specified in the Notice of Award, program income is to be treated as Additive. If the sponsoring agency does not specify which method should be used, Federal regulations state that recipients shall follow the Additive method.
If authorized by Federal awarding agency regulations or the terms and conditions of the award, costs incident to the generation of program income may be deducted from gross income to determine program income, provided these costs have not been charged to the award. Questions related to the method used for a specific project should be directed to the respective Project Officer in Sponsored Projects Administration (SPA) and the respective Finance and Compliance Manager in Sponsored Projects Finance (SPF).
When there is program income for a sponsored project, the DA is responsible for a) informing SPA and SPF of the scope and source of the income, b) appropriately monitoring, budgeting and accounting for the income, and c) providing SPF any program income information required to satisfy reporting requirements.
Program income treatment may necessitate various accounting actions, including the transfer of income to the sponsored project, budget adjustments and cash refunds. While the DA is responsible for ensuring these tasks are performed, he or she may reach out to the SPF Finance and Compliance Manager for guidance on transaction processing. Refunds, specifically, must be requested of the SPF Manager, who will initiate the return and ensure funds are issued to the sponsor.
Unless Federal awarding agency regulations or the terms and conditions of the award provide otherwise, there is no obligation to the Federal Government regarding program income earned after the end of the project period.
Finally, unless Federal awarding agency regulations or the terms and condition of the award provide otherwise, there is no obligation to the Federal Government with respect to 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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