Title III Administrative and Financial Requirements Policy #17: Use of Program Income

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Note: We updated content on this page on April 22, 2025. Changed content is indicated with [add] and [delete].

Authority Reference	45 CFR Part 1321.9(c)(2)(xii) 2 CFR 200.307 45 CFR 75.307
Operating Category	Title III Administrative and Financial Requirements

Policy

1. Program income means gross income received by the grantee/contractor that is directly generated in whole or in part by a grant/contract supported activity or earned as a result of the grant/contract agreement during the grant/contract period. For example, voluntary contributions, cost sharing payments, and income from the use of property acquired with grant/contract funds are all considered program income.

2. Gross income may be an amount larger than program income. If the cost of generating the program income has not been charged to the federal grant/contract, a service provider may deduct the cost of generating the program income from gross income to arrive at the amount of program income.

For example, if a provider generated $1,000 in gross income through voluntary contributions and spent $100 in mailing letters to clients to generate those voluntary contributions (and did not already charge the $100 to the grant or contract), the amount of program income would be $900.

3. Program income shall be used together with the funds committed to the grant/contract agreement by the AAA and the grantee/contractor. Program income must be used to expand a service funded under the Title III grant award pursuant to which the income was originally collected. For example, if the Title III contract/grant amount was for $50,000 and, using the example above, $900 in program income was generated, the total amount of allowed project costs become $50,900.

4. Program income must be expended or disbursed prior to requesting additional Federal funds and must be used to pay for allowable costs.

5. Program income may not be used to match grant awards funded by the Act without prior approval.

Procedures

1. Service providers are responsible for regular and prompt deposits of program income.

2. In billing the AAA for services provided under the grant or contract, the service provider must use and account for the program income first before calculating the amount to be billed to the contract and requesting reimbursement for expenses or services.

3. Service providers must report all program income using the addition alternative to the AAA per the signed grant/contract agreement.

4. The AAA is obligated to report all Program Income to the MBA as part of its standard reporting cycle. AAAs must use the addition alternative as set forth in 2 CFR 200.307(e)(2) and 45 CFR 75.307(e)(2) when reporting program income.

Various types of program income (cost sharing, voluntary contributions, etc.) should be recorded on separate lines of the Program Budget Summary and the Budget Explanation of Non-Federal Revenue.

5. If the service provider contracts with the AAA for an initial and subsequent year(s), program income earned during the first calendar year, but received in the subsequent calendar year must be utilized to expand services in that subsequent calendar year.

6. Contracts and grant agreements between AAAs and service providers are to be written for the amount of federal funds awarded to the service provider. As noted above, the required use of the addition alternative increases the amount of allowed project costs commensurate with the program income received.

[add] 7. MBA will provide more detailed implementation guidance about the additive method at a future point. [end add]

[add] 8 [end add] [delete] 7 [end delete]. AAAs must develop policies and procedures related to use of program income for service providers that are aligned with this policy and procedure.