Patronage Refunds

This fall the Wedge Co-op will again distribute patronage refunds to the membership. This is one of the biggest benefits of being a cooperative. Here's how it works:

Co-ops are unique businesses because they are based on member ownership. Member investment (the $80 you paid to join) provides the resources to create the cooperative in the first place.

The co-op finds the products members want to buy and sets prices to cover the costs of providing those goods in a retail environment. It is necessary to set prices slightly higher than routine costs to allow for the uncertainties of the real world. These include such things as fluctuations in food costs, equipment failures, inflation and liabilities that all organizations are subject to. A well-run cooperative will maintain the ability to pay its vendors and employees despite inevitable uncertainties. Consequently, most years the cooperative should generate a surplus of income over expenses (profit).

Cooperatives enjoy a privileged status and can return the surplus to the members as patronage refunds that are tax free to the co-op and the members. By law patronage refunds must: 1) be only from member income, 2) be allocated based on each member's purchases (patronage) from the co-op, and 3) be allocated to an individual account in the name of each member. The cooperative can distribute the patronage refunds to each member as cash or retain a portion as additional investment in the business. The Board of Directors looks at the financial performance each year, considers the co-opÕs needs for the future, and decides what portion to pay out or retain. The cash portion is sent (as a check) with a notice of allocation that also indicates the retained investment (non-voting stock) that is being held in the name of that member.

To be eligible for a patronage refund this year, a member must have shopped (as a member) between July 1, 2003 and June 30, 2004, and been an active member in good standing on June 30, 2004.