Program Income: Accountability and Alternatives for Use

This section of the HHS Grants Policy Statement provides the definition of program income as being "directly generated by the grant-supported activity or earned as a result of the award." Grantees or delegate agencies that have program income will benefit from this information in maintaining compliance with the regulations. The resource also provides the requirements for accountability as well as its alternative use.

The following is an excerpt from the HHS Grants Policy Statement.

Program income is gross income—earned by a recipient, subrecipient, or a contractor under a grant—directly generated by the grant-supported activity or earned as a result of the award. Program income includes, but is not limited to, income from fees for services performed; charges for the use or rental of real property, equipment, or supplies acquired under the grant; the sale of commodities or items fabricated under an award; charges for research resources; and license fees and royalties on patents and copyrights.

The requirements for accountability for the various types of income under HHS grants are specified in this section. However, the NoA governs the disposition of royalties and other income earned from a copyrighted work, patents, patent applications, trademarks, or inventions. Generally such income is not subject to the requirements of this section.

Accountability refers to whether the OPDIV specifies how the income is to be used and whether the income needs to be reported to the OPDIV and for what length of time. Program income earned during the project period must be reported by the recipient as discussed in this section.

Each NoA will indicate the alternative for disposition of program income. For non-research grants, if no alternative is specified, the program income must be used under the deductive alternative. The default alternative for research grants (except for awards to commercial organizations under programs other than the Small Business Innovation Research and Small Business Technology Transfer programs) is the addition alternative as provided in 45 CFR 74.24(d).

Regardless of the alternative 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. Subawards and contracts under grants are subject to the terms of the subaward or contract with regard to any income generated, but the terms specified by the recipient must be consistent with the requirements of the NoA.

Program income earned during the period of grant support—other than income earned as a result of copyrights, patents, or inventions (see "Rights in Data") or as a result of the sale of real property, equipment, or supplies ("Property Management")—must be retained by the recipient and, as specified in the NoA, may be used in one or a combination of the ways indicated in Exhibit 7. Unless otherwise specified in the terms and conditions of the award, recipients are not accountable for program income earned after the period of grant support.

"Program Income: Accountability and Alternatives for Use." HHS Grants Policy Statement. HHS/ACF/OHS. 2007. English.

Last Reviewed: November 2008

Last Updated: August 5, 2015