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Program Income

Program income is defined as gross income earned by the University that is either directly generated by the sponsored project or earned as a result of a sponsored project during the period of time the sponsored project is active. Federal policy for program income is set forth in the Uniform Guidance and OMB Circular A-110, and applies to federal, federal pass through, and other sponsor support.


Examples of program income include, but are not limited to, income from:

  • registration fees charged to participants for a workshop or conference funded under a sponsored award
  • fees for services provided under an award
  • recharging for the use of property acquired under federally funded projects
  • sale of commodities or items fabricated under an award
  • license fees

Program income does not include the receipt of principal on loans, rebates, credits, discounts, etc., or interest earned on any of them.

Federal regulations define the following methods for recording program income during the life of the award:

  • Additive Alternative: Added to funds committed to the project by the sponsor and treated and used in the same way as the sponsored funds to further advancement of program objectives. OCG will set up a grant cost center similar to the sponsor cost center.
  • Deductive Alternative: Deducted from the total project amount in determining the net award and treated in the same way as the sponsored funds to further advancement of program objectives. OCG will set up a grant cost center similar to the sponsor cost center.
  • Matching Alternative: Used as cost sharing to finance the non-sponsored share of the project by supporting project activities and objectives. The Department sets up a non-grant cost center.

Program Income Funds

Program income must be correctly accounted for, used, and reported in accordance with federal regulations and the terms and conditions of each sponsored agreement. A separate cost center should be set up to record program income for each sponsored project generating program income. When program income is anticipated, OCG will establish a project cost center for the program income fund to record the program income realized from either external revenue or internal transfers. Any sales/use tax collected must be properly recorded in accordance with Controller’s Office policies.

  • Program income funds recorded using method #1 and #2 must be expended prior to expending federal or other sponsor funds. Upon termination of the sponsored project all program income earned during the project period (life) must be liquidated. The resulting net allowable expenses remaining on the sponsored project fund represent the federal or other sponsor obligation.
  • If the sponsor does not specify which of the three ways the program income must be used, then cost sharing (#3) is applied except for research projects. For awards that support research, program income should be automatically added to the project funds unless the sponsor indicates in the terms and conditions another alternative.
  • Program income in excess of amount stipulated in method #1 and #2 can be used as cost sharing.
  • When program income is used for cost sharing. During the life of the award, the program income generated should be set up in a non-grant cost center and reported in accordance with the cost sharing guidelines.
  • If the activity generating the program income continues after the sponsored project terminates, it converts to either an External Sale of Education Related Activities or a Recharge center and a new cost center must be established in the Sales & Service fund range (2060). The new fund will be assessed F&A costs consistent with the University of Houston recharge policy. There will be no further obligation to the federal government or other sponsor for program income earned after the completion of the sponsored project.