GIM 18
Attachment A
Part 8

General Program Income
Sale of Real Property, Equipment, and Supplies
Other Income

Recipients are accountable to PHS for certain kinds of program income in accordance with 45 CFR Part 74, Subpart F, and 45 CFR Part 92.25. Contracts under a grant are subject to the terms of the contract with regard to the income generated by the activities. Program income includes general program income (see 45 CFR Part 74.42); proceeds from the sale of assets acquired with project funds; royalties from copyrights on publications developed under, or patents and inventions conceived or first actually reduced to practice under, a grant-supported project; and interest and investment income. These requirements are set forth in 45 CFR Part 74, Subpart F, and in 45 CFR Part 92.25 and are summarized below.

Each NGA will provide information as to the treatment of program income for each funded project.

All general program income, as defined in 45 CFR Part 74.42 and program income as defined in 45 CFR Part 92.25, earned during the period of PHS grant support shall be retained by the recipient and shall be treated in accordance with one or a combination of the following options:

1. Deduction Alternative: Deducted from total allowable costs and third-party in-kind contributions for the purpose of determining the net costs on which the Federal share will be based. When this alternative applies, the deduction must be made from current costs unless the terms of the NGA authorize deferral to a later period. General program income subject to this alternative shall be reported on lines 10c and 10q of the FSR (Long Form).

2. Matching Alternative: Used to satisfy all or part of a matching requirement. General program income subject to this alternative shall be reported on lines 10g and 10q of the FSR (Long Form).

3. Additional Costs Alternative: Used for costs that are in addition to the allowable costs of the project for any purposes that further the objectives of the legislation under which the grant was made. General program income subject to this alternative shall be reported on lines 10r and 10s, as appropriate, of the FSR (Long Form).

Option 1 above may always be selected by recipients and must be used if neither of the other alternatives is specified by the PHS awarding office in regulations or on the NGA. A subgrantee may not be permitted to use an option not permitted by the terms of the award to the grantee.

For information on treatment of program income by:

• State and local governments and federally recognized Indian tribes, see 45 CFR Part 92.25.

• Recipients of research grants, see below.

• All other nonprofit grantees, see 45 CFR Part 74, Subpart F.

• For-profit organizations, see appendix 6.

Interest earned by recipients as a result of a permissible use of general program income, e.g., where a statute or other grant term provides for the use of income to be deferred to a later period, shall be retained by the recipient and treated as general program income.

Recipients of certain PHS research grants have been extended the authority to use the Additional Costs Alternative (see Special Provisions for Research Grants). Each NGA will provide information as to the treatment of program income for each funded project.

For research grants not included in the special grant provisions (expanded authorities), general program income shall be used as follows unless specified otherwise by the awarding office:

1. The first $25,000 of program income is to be used in accordance with the Additional Costs Alternative and shall be reported on lines 10r and 10s of the FSR (Long Form). However, this option may not be authorized for for-profit grantees (however, see also appendix 6), grantees designated as exceptional organizations, or where the principal investigator has a history of frequent, large annual unobligated balances on previous grants or has requested multiple extensions of the budget/project period.

2. Amounts in excess of $25,000 are to be used in accordance with the Deduction Alternative, unless another alternative is specified on the NGA, and shall be reported on lines 10c and 10q of the FSR (Long Form).

45 CFR Part 74.134 states that the disposition instructions of the granting agency shall be followed when real property is no longer to be used by the grantee or transferred to an eligible third party.

Grantees subject to the requirements in 45 CFR Part 74.139, Disposition of Equipment, shall report income earned from the sale of equipment on the FSR if the grantee's project or program for which equipment was acquired is still receiving grant support. If authorized by the awarding unit, grantees may use the income for allowable costs of the project. This income would be reported on lines 10c, 10r, or 10s of the FSR (Long Form) in accordance with the PHS awarding office's authorized disposition. There are no reporting requirements for nonprofit institutions of higher education or nonprofit organizations whose primary purpose is the conduct of scientific research, since they are not subject to the requirements in 45 CFR Part 74.139.

Grantees subject to the requirements in 45 CFR Part 74.141, Unused Supplies, shall reflect any credit to the grant on line 10c of the FSR (Long Form). There are no reporting requirements for nonprofit institutions of higher education or nonprofit organizations whose primary purpose is the conduct of scientific research, since they are not subject to the requirements in 45 CFR Part 74.141.

Where the terms of the NGA do not specify disposition, no reporting of income is required on the FSR. Where the terms of the NGA govern disposition, this kind of income shall be reported on lines 10c, 10r, or 10s of the FSR (Long Form), in accordance with the PHS awarding office's authorized disposition.

Where the terms of the NGA govern disposition, this kind of income would be reported on lines 10c, 10r, or 10s of the FSR in accordance with the PHS awarding office's authorized disposition. Where the terms of the NGA do not specify disposition, PHS awarding office instructions for reporting this kind of income shall be followed.

Except as provided immediately below, grantees shall remit to the Federal Government any interest or other investment income earned on advances of PHS grant funds. This includes any interest or investment income earned by subgrantees and cost-type contractors on advances to them that are attributable to advances of PHS grant funds to the grantee. However, States shall not be accountable to the Federal Government for interest or investment income earned by the State itself, or by its subgrantees, where this income is attributable to Federal grants.

Unless specified in the terms of the NGA, there are no reporting requirements for income accrued after the period of grant support ends.