Managing Program Income Generated on Sponsored Projects

 

Policy Statement

Program Income that is generated from sponsored projects funded in whole or in part by federal or non-federal sponsors must be properly identified, used, accounted for and reported on in compliance with sponsor requirements.   

Reason for Policy 

To provide parameters for the managing of income that is directly generated by a supported activity or earned as a result of the Award. This policy is designed to provide guidelines that will help the recipients of sponsored funding comply with the requirements Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR §200) or – for funding effective before December 26, 2014 - OMB Circular A-21, Cost Principles for Educational Institutions (2 CFR §220) and/or OMB Circular A-110 (2 CFR § 215), collectively referred to as Federal Guidance, federal awarding agency regulations, and the terms and conditions of sponsored projects regarding accounting for Program Income. To be consistent, the university extends the Federal Guidance for income generated on all sponsored projects in whole or in part by both federal and non-federal sponsors, except where the terms of any such agreement are explicit and mandate some other treatment. 

Who is Governed by this Policy 

  • Staff
  • Faculty

Policy

Sponsors provide funding to the university to cover the costs of conducting Research, training, and public service-related activities. These activities may produce Program Income, which in most cases must be reported to the sponsor.  

Identifying Program Income 

The principal investigator (PI) is responsible for identifying sources of actual or potential Program Income. Appendix A to this policy provides guidance for determining whether any income earned as a result of a sponsored project is Program Income.  A PI needing further guidance should contact the Office of the Vice President for Research (OVPR).   

The PI must notify the department chair as soon as an actual or potential source of Program Income has been identified.  The PI also must notify OVPR so that a Project- Task-Award (PTA) for the Program Income activity can be created in the Enterprise Accounting System (EAS) financial system. 

Accounting for Program Income 

The university’s Opening Bank Accounts Policy prohibits the establishment of an independent bank account for any reason.  Any and all Program Income payments must be made payable to George Washington University. The PTA must be identified for each payment, and payments must be deposited in accordance with university’s Deposit of Checks, Cash and Credit Card Receipts Policy. 

The PI, in consultation with his/her chair, is responsible for knowing that a sound accounting system has been developed for the financial management of the Program Income project. A sound accounting system, specifically a cash management system, will conform to generally accepted accounting principles and the PI will obtain the guidelines for developing an effective cash management system from the school or department’s designated finance director.  The university’s Opening Bank Accounts Policy prohibits the establishment of an independent bank account for any reason.  Any and all Program Income payments must be made payable to George Washington University and managed through the Finance Division.  At a minimum, the designated finance director will provide the PI with the following:  

  1. Payment instructions;  
  2. A receipt register for tracking receipts; and 
  3. A periodic reconciliation of the receipt register to the record of deposits. 

Program Income Awards are subject to the same sponsor rules, regulations and limitations applicable to the primary Award and, accordingly, only those expenses that are allowable and allocable to the Award may be charged directly to the Program Income Award. 

  1. Program Income from Federal Sponsored Projects   

Normally, Program Income earned on federally-funded Research Awards must be added to funds committed to the project by the federal awarding agency and used to further eligible project or program objectives.   Based on the terms and conditions of certain Awards, Program Income earned must be deducted from the total project or program allowable cost in determining the net allowable costs on which the federal share of costs is based.  Under special circumstances, Program Income earned on federally-funded non-Research Awards may be used to finance the non-federal share of the project or program (i.e., used to fulfill cost sharing requirements.  See also the university’s Cost Sharing on Sponsored Projects Policy).   

OVPR will assist the PI in reviewing sponsor regulation and/or specific Award terms to identify which options are available for using the Program Income that is generated throughout the life of the Award.  

The chair is responsible for consulting with the Office of the Comptroller regarding the taxability of any Program Income. 

  1. Program Income from Non-Federal Sponsored Projects  

Program Income earned from non-federal funds during the project period may be used in one or more of the following ways unless the sponsored project specifies otherwise:  

A. To cover increased costs of the project and to further the project;  

B. To fulfill a cost sharing requirement; or  

C. To support other departmental projects. 

The PI must contact the department chair to determine the appropriate accounting treatment for Program Income earned after the end of the non-federal project. The chair is responsible for consulting with the Comptroller’s Office regarding the taxability of any Program Income. 

Subrecipient Compliance  

The PI is responsible for identifying subrecipients that are generating Program Income and for notifying the Office of the Vice President for Research (OVPR). OVPR is responsible for monitoring subrecipients for appropriate identification, use, accounting and reporting of Program Income in accordance with the university’s Subrecipient Monitoring Policy.

Definitions

Award: Any financial assistance that provides support or stimulation to accomplish a public purpose. Awards include grants, contracts and other agreements in the form of money or property in lieu of money. 

Program Income: Program Income means gross income that is directly generated by a supported activity or earned as a result of the Award during the period of performance.  

Research and Development: Research and Development means all Research activities, both basic and applied, and all Development activities that are supported at universities, colleges, and other non-profit institutions.  “Research” is defined as a systematic study directed toward fuller scientific knowledge or under-standing of the subject studied.  “Development” is the systematic use of knowledge and understanding gained from Research directed toward the production of useful materials, devices, systems, or methods, including design and Development of prototypes and processes. The term Research also includes activities involving the training of individuals in Research techniques where such activities utilize the same facilities as other Research and Development activities and where such activities are not included in the instruction function.    

Related Information

45 CFR 74.1 et seq., Department of Health and Human Services Uniform Administrative Requirements for Awards and Sub-Awards to Institutions of Higher Education, Hospitals, other Nonprofit Organizations, and Commercial Organizations   

National Science Foundation Grants Policy Manual 

NIH Grants Policy Statement 

Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR §200) 

OMB Circular A-110, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education  

Award Management and Closeout Policy 

Copyright Policy 

Cost Sharing on Sponsored Projects Policy 

Deposit of Checks, Cash, and Credit Card Receipts Policy 

Opening Bank Accounts Policy 

Patents and Scholarly Work Policy 

Sponsored Activities Definition 

Subrecipient Compliance Policy 

Contacts

Contact Phone Number Email Address
Office of VP for Research 202-994-6255  [email protected]
Grants and Contracts Accounting Services 703-726-4242   
Office of the Comptroller 703-726-4079   

Responsible University Official: Vice President for Research
Responsible Office: Office of the Vice President for Research

Last Reviewed: December 19, 2014

 

Non-compliance with this policy can be reported through this website.