What is Patronage?
What is a patronage rebate?
Co-ops are distinctive businesses based on ownership, which allows them to return excess profit to their owners as rebates that are tax-free. These rebates are called “patronage” rebates because they are based on how much owners “patronized” or spent at the Co-op the previous fiscal year. By law patronage rebates can only come from owner income (not non-owner purchases) and be allocated based on each owner’s purchases (patronage) at the co-op. The profit returned to owners as rebates are funds not needed for new owner services or future projects.
How does it work?
Throughout the year the co-op tracks how much each owner spends, which is why we ask for owner cards at checkout. Generally, if the co-op has made a profit in excess of what it needs to operate, it may return a percentage of that profit back to its owners. The Board of Directors, utilizing the General Manager’s recommendation, determines what percent of the profit will be returned to owners and what percent is retained by the co-op.
Why isn’t all the profit returned to owners?
The co-op needs to retain some of the profit as a financial cushion for lean years or to finance expansion or other owner services. Although owners do not receive this profit as a cash rebate, they, in effect, jointly invest more money to grow the co-op and provide more of the services they want. There may be years when no patronage is returned due to a project or other immediate need of the co-op.
What do owners need to do?
You need to show your ownership card every time you make a purchase so we can track what you have spent during the year. You will need to keep your ownership current and let us know if your address or contact information changes.
When can owners expect a patronage rebate?
Once the fiscal year ends (December 31st) the co-op utilizes the first quarter of the following year to finalize its year-end financials and evaluate its needs, with an announcement about the patronage rebate set for the General Ownership Meeting in April.