program income, earned, reporting program income; sale of real property, equipment, and supplies; and royalties and licensing fees from copyrights, inventions, and patents

8.3.2 Program Income

Program income is gross income-earned by a recipient, a consortium participant, or a contractor under a grant-that was 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; registration fees for grant-supported conferences, and license fees and royalties on patents and copyrights. (Note: Program income from license fees and royalties from copyrighted material, patents, and inventions is exempt from reporting requirements unless otherwise specified in the terms and conditions of award.) The requirements for accountability for these various types of income under NIH grants are specified in this subsection. Accountability refers to whether NIH will specify how the income is to be used and whether the income needs to be reported to NIH and for what length of time. Unless otherwise specified in the terms and conditions of the award, NIH recipients are not accountable for program income accrued after the period of grant support.

NIH applies the additive alternative to all recipients, including for-profit entities, unless there is a concern with the recipient or activity and NIH uses special terms and conditions, or the program requires a different program income alternative. NIH may require a different use of program income if a recipient has deficient systems; if the PD/PI has a history of frequent, large annual unobligated balances on previous grants; or if the PD/PI has requested multiple extensions of the final budget period of the project period. Regardless of the alternative applied, program income may be used only for allowable costs in accordance with the applicable cost principlesThe government-wide principles, issued by OMB (or, in the case of commercial organizations, the Federal Acquisition Regulation [48 CFR 21], or, in the case of hospitals, 45 CFR 75, Appendix IX, "Principles For Determining Costs Applicable to Research and Development Under Grants and Contracts with Hospitals"), on allowability and unallowability of costs under federally sponsored agreements. See Cost Considerations-The Cost Principles for additional details. and the terms and conditions of the award. Each NoANotice of Award: The official, legally binding document, signed (or the electronic equivalent of signature) by a Grants Management Officer that: (1) notifies the recipient of the award of a grant; (2) contains or references all the terms and conditions of the grant and Federal funding limits and obligations; and, (3) provides the documentary basis for recording the obligation of Federal funds in the NIH accounting system. will indicate the allowable treatment of program income. Program income alternatives and their usage are noted below in Exhibit 9.

Consortium agreements and contracts under grants are subject to the terms of the agreement or contract with regard to the income generated by the activities, but the terms specified by the recipient must be consistent with the requirements of the grant award. Program income must be reported by the recipient as discussed in this subsection.

8.3.2.1 Reporting Program Income

The amount of program income earned and the amount expended must be reported on the appropriate annual financial report, currently the FFR. Any costs associated with the generation of the gross amount of program income that are not charged to the grant should be deducted from the gross program income earned, and the net program income should be the amount reported. Program income must be reported in the Program Income section of the FFR (lines 10 L – O). (See Administrative Requirements-Monitoring-Reporting-Financial Reporting.) For awards under SNAP, the amount of program income earned must be reported in the non-competing continuation progress report.

Income resulting from royalties or licensing fees is generally exempt from reporting as program income.

When applicable, income earned from the sale of equipment must be reported on the FFR for the period in which the proceeds are received in accordance with the reporting requirements for the program income alternative specified. Amounts due NIH for unused supplies must be reflected as a credit to the grant on the FFR using line 10 m.

Reporting requirements for accountable income accrued after grant support ends will be specified in the NoANotice of Award: The official, legally binding document, signed (or the electronic equivalent of signature) by a Grants Management Officer that: (1) notifies the recipient of the award of a grant; (2) contains or references all the terms and conditions of the grant and Federal funding limits and obligations; and, (3) provides the documentary basis for recording the obligation of Federal funds in the NIH accounting system..

Exhibit 9. Use and Applicability of Program Income Alternatives

Program income alternative Use of program income Applicability
Additive Alternative Added to funds committed to the project or program and used to further eligible project or program objectives. Applies to all NIH awards unless there is a concern with the recipient or activity or the program requires a different alternative.
Deductive Alternative Deducted from total allowable costs of the project or program to determine the net allowable costs on which the Federal share of costs will be based. Available for use by NIH programs on an exception basis.
Combination Alternative Uses all program income up to (and including) $25,000 as specified under the additive alternative and any amount of program income exceeding $25,000 under the deductive alternative. Available for use by NIH programs on an exception basis.
Matching Alternative Used to satisfy all or part of the non-Federal share of a project or program. Available for use by NIH programs that require matching.

8.3.2.2 Sale of Real Property, Equipment, and Supplies

The requirements that apply to the sale of real property are addressed in the Construction Grants chapter. For equipment and supplies purchased under NIH grants for basic or applied research by non-profit institutions of higher education or non-profit organizations whose principal purpose is the conduct of scientific research, the recipient is exempt from any requirement to account to NIH for proceeds from the sale of the equipment or supplies; however, NIH has certain rights with respect to such property as specified in Administrative Requirements-Management Systems and Procedures-Property Management System Standards.

All other types of grants and recipients are subject to the requirements in 45 CFR 75.320 and 75.439 if title to the equipment vests in the recipient rather than in NIH. If the grant-supported project or program for which equipment was acquired is still receiving NIH funding at the time of sale, the recipient must credit the NIH share of the proceeds to the grant and use that amount under the deductive alternative for program income. If the recipient is no longer receiving NIH grant support, the amount due should be paid in accordance with instructions from NIH. These grants and recipients also are subject to the requirements in 45 CFR 75.321 and 75.453 with respect to the use or sale of unused supplies. If the recipient retains the supplies for use on other than federally sponsored activities, an amount is due NIH as if they were sold.

8.3.2.3 Royalties and Licensing Fees from Copyrights, Inventions, and Patents

NIH recipients do not have to report program income resulting from royalties or licensing fees from sale of copyrighted material unless specific terms and conditions of the award provide otherwise. The NoANotice of Award: The official, legally binding document, signed (or the electronic equivalent of signature) by a Grants Management Officer that: (1) notifies the recipient of the award of a grant; (2) contains or references all the terms and conditions of the grant and Federal funding limits and obligations; and, (3) provides the documentary basis for recording the obligation of Federal funds in the NIH accounting system. may include special terms and conditions if commercialization of an invention is an anticipated outcome of a research project.

However, the regulations implementing the Bayh-Dole Act (37 CFR 401.14(h)) require reporting of income resulting from NIH-funded inventions and patents. Specifically, as part of the annual invention utilization report, recipients must report income generated by all subject inventions to which title has been elected and by inventions such as research tools that have been licensed but not patented (see Administrative Requirements-Availability of Research Results: Publications, Intellectual Property Rights, and Sharing Research Resources and Administrative Requirements-Monitoring-Reporting).