Program income is gross income earned by a recipient from activities all, or part, or of which are supported by the direct costs of an award. Program income includes, but is not limited to:

• Fees for services performed under the grant, such as those resulting from laboratory drug testing.
• Rental or usage fees, such as those earned from fees charged for the use of computer equipment or laboratory instrumentation purchased with grant funds.
• Conference or participant fees in excess of revenue.
• Funds generated by the sale of commodities such as tissue cultures, cell lines, or research animals.

Except as otherwise provided in federal 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.
• interest earned on advances of federal funds.
• income earned from license and royalties for copyrighted material, patents, patent applications, trademarks and inventions produced under an award.
• income earned after the end of the project period. (NEH reserves the right to make claim to or restrict the use of the federal share of income earned during the five years following the grant period.)

These standards do not cover proceeds from the sale of property.

Estimates of Anticipated Program Income: Many federal agencies have grant application forms which ask the applicant to enter the estimated income, if any, expected to be generated by the project. The anticipated nature and source of the income must be provided on the application forms themselves (PHS) or included in the narrative statement (NEH, and any agency using the Standard Form 424A).

Disposition of Program Income: Program income earned by the award recipients are retained by the recipients, and, in accordance with agency regulations or the terms of the award, be used in one of three ways:

• Option 1: Added to funds committed to the project by the awarding agency and by the recipient and used to further eligible project directives.
• Option 2: Used to finance the non-federal share of the project or program.
• Option 3: Deducted from the total project or program allowable cost in determining the net allowable costs on which the federal share of costs is based.

If an agency authorizes a recipient to use Options 1 or 2 in the disposition of program income, but sets a dollar limit on funds to be used according to these two options, any excess will be used in accordance with Option 3.

In the event that an awarding agency does not specify in its regulations or in the terms and conditions of an award, the recipient must select the appropriate option based on the following criteria:

• for awards that support research, Option 1 shall apply automatically. (The only exception to this rule would occur if a recipient has been subject to special award conditions as a result of agency concerns about the recipient's ability to perform the research or manage federal funds.)
• for all other program, Option 3 will automatically apply.

Reporting: The University is required to report any program income generated during the performance of the grant on the FSR (SF 269). In order to identify the revenue as program income, use the following G/L Accounts:

• 349400 Sundry Revenue: to be used when revenue is received from non-Duke sources.
• 752500 Program Income: to be used when revenue is received from Duke fund codes.

Isolating program income in a distinct object code will allow the University to report accurately on the FSR. It is also possible to establish sub-accounts to help identify and manage program income, such as an account for conference expenses and revenues.

Departments are responsible for identifying program income and using the correct object codes to record the income. If program income is estimated during the application process and does not materialize under G/L Accounts 349400 or 752500, it will be the department's responsibility to identify the income to be reported, or provide an explanation about why the anticipated program income was not generated.