Important Update on Program Income Tracking for Recovery Grants

From Tennessee Arts Commission –

Good news!  The Tennessee Arts Commission has learned that the U.S. Department of Treasury has now made a final determination on the treatment of program income directly generated from costs supported by Coronavirus State and Local Fiscal Recovery (SLFRF) funds. Instead of defaulting to the “deduction” requirement, Treasury now authorizes recipients to add program income to the federal award, not deduct it from the award.  The underlying federal award amount is unchanged.  In addition, Program Income has been identified as not subject to audit as part of Single Audit compliance testing procedures.

That means that for FY23 and FY24, when TN Arts & Culture Nonprofit Recovery Fund grantees provide an updated revised budget, the federal grant funds can be used without penalty to offset allowable costs that directly generate program income, including ticket sales or entry fees.  As always, fund-raising costs are not allowable for federal support. It also means that grantees subject to the Single Audit requirement will not be tested for program income compliance as part of the audit.

However, program income must still be tracked as it is included in required reporting to Treasury, and program income generated from SLFRF funds must be used for the purposes and under the conditions of the Federal award. To avoid the tracking and reporting issues, it’s still better to use these federal funds for costs that do not directly generate program income.

The Tennessee Arts Commission will be updating its guidance related to program income, including links to the underlying federal policies.  The new info about audit requirements came in a 1,968 page document while the program income “addition vs.  deduction” guidance was in a slim 50 page FAQ.