Patronage Dividend System
Patronage Dividend Frequently Asked Questions
Who makes the decision on what/how much to pay out? With input regarding co-op finances from the Collective Management, the Board of Directors makes the final decision.
How does the Board of Directors make a decision about how much to pay out? Generally, the board's primary concern is to sustain and develop this thriving community resource. It is important that we have adequate capital for the long-term financial health of the co-op, to ensure our ability to meet our financial obligations (vendors, debts), as well as to provide capital for equipment purchases and repair, building upkeep, development, and long-term plans. All of these needs are balanced against the needs of our individual owners.
How much will my dividend be? Every year is different, but the payout often hovers around 1% of the value of your total purchases for the year.
How can I increase my dividend? Because you are receiving a portion of your spendings back, the more you shop at the co-op, the more you are eligible to earn in a dividend. As an active Member-Owner, we track your purchases as patronage points to calculate your refund at the year's end.
Why did People's move from a discount at the register for Member-Owners to a Patronage Dividend System? It’s a more sustainable method of distributing profits. The dividend program allows the board to decide how much to safely return after the books are closed. Patronage dividends also allow the co-op to realize significant tax savings. The dollars that we allocate as patronage stay here in the community rather than going to the IRS. And finally, the retained portion of patronage dividends builds financial stability.
Do other co-ops use this form to return profits to their Member-Owners? Nearly all cooperative businesses use dividends. More and more natural foods co-ops are using dividends, but nearly all co-ops in other sectors use them.
Are taxes taken out of my dividend? No. However, if you use your membership for business purchases you should consult your accountant.
When was this decision made and when were the owners told about this? During the fall of 2006 and the winter and spring of 2007 the board engaged with Co-op Member-Owners around the issue of dividends. There were meetings, newsletter articles and other opportunities for Member-Owners to ask questions and shape the plan. It went to Member-Owner vote in the summer of 2006, resulting in the first dividend being issued in the summer of 2007.
Will the Co-op distribute a patronage dividend every year? Dividends will be distributed if the co-op has a net profit.