How is investment income treated in regards to program revenue?

Investment income typically does not qualify as program revenue because it is generally not directly derived from the core activities or programs of an organization. Program revenue is defined as income generated from the sale of goods or services that are part of an organization's primary mission, such as fees for services provided in the course of fulfilling its programmatic goals.

In contrast, investment income arises from the organization’s investments, which may include interest, dividends, and capital gains. These earnings are usually considered ancillary to the main activities of the organization and do not reflect the organization's effectiveness in accomplishing its mission-driven objectives.

Since program revenue is tied closely to operational activities, the revenue generated by investment activities is accounted for differently, often categorized under non-operating income rather than program income. This distinction is important for financial reporting and analysis, as stakeholders seek to understand how effectively an organization generates revenue from its primary operations as opposed to passive investment income.