07/25/2006 01:52:15 PM (Revised 12/26/2014)
Lorrie Lau
HQs Planning Memos and Guidance, Federal Highway Administration,
Lorrie.Lau@dot.gov
Recipients and subrecipients of Federal grants or subgrants can earn income as a result of grant/subgrant supported activities. In fact, recipient/subrecipients are encouraged to earn income to defray program cost, where appropriate. For more information on this, please review 2 CFR 200: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (200.307 - Program Income). The complete regulations can be found at http://www.fhwa.dot.gov/hep/guidance/.
Under this regulation, program income (2 CFR 200.80) is defined as income earned during the grant/project period as a result of grant/subgrant supported activities. Income from grant supported activities, such as, but not limited to, fees for services performed, the use/rental of real or personal property acquired under federally funded projects, or the sale of commodities or items fabricated under an award, royalties and license fees on copyrighted material, patents, and inventions identified in the grant agreement, and principal and interest on loans made with the grant funds earned during the grant period are also program income.
Any net proceeds (income received less the cost to generate the income) from program income, must be deducted from the recipient's/subrecipient's expenditures before billing for the Federal share of the net expenditures. However, with prior Federal agency approval program income may be used to meet any non-Federal matching funds requirement or for additional grant activities.
There are no specific requirements that govern income after the grant/project period has ended (2 CFR 200.307(f)). If the income is earned after the close of the Federal grant, it is not program income and may be retained and used by the recipient/subrecipient as it chooses unless the grant/subgrant agreement provides otherwise. Appropriate uses of such income could include continuing performance of similar program activities or providing the matching share for future federal grants.
If funds are subgranted to a local government by a State agency, the State agency needs to notify the local government of the State's requirements and also ensures Federal requirements are met for disposition of income earned as a result of subgrant supported activities.
