In 2011, the CNFC Board of Directors committed to adding patronage refunds as an additional owner benefit. 2013 was the BOD's first year determing refunds based on owner profits from 2012.
A patronage refund is a distribution a cooperative pays to its member-owners (investors). Patronage refunds are given based on a proportion of profit made by the business. Once this amount is determined, the refund is calculated according to how much each member has spent during that fiscal year at the Co-op.
· March-April: The Co-op’s CPA works to determine if Patronage Refunds are feasible.
· May-June: BOD makes final decision
· July-Aug: CPA finalizes the Co-op’s tax returns, including patronage (declared, paid, and retained)
· After this, the BOD will determine how the refunds will be dispersed and the General Manager will develop the annual report for owners.
How Patronage Refunds work:
Let's Talk About It!
The CNFC Board of Directors would appreciate the opportunity to answer your questions and hear your input. Here’s when, where, and how:
Monthly BOD Meetings
All meetings are held the last Wednesday of each month at the Chico Peace and Justice Center, 526 Broadway, from 5:30-8:30 pm. Meetings are open to the public with allotted time to hear owners speak.
In the Store
We will make every effort to be available to discuss your questions in person. Ask for Liza Tedesco, General Manager or Joey Haney, Ownership and Outreach Coordinator, Monday through Friday. If they are not available, they will call you back.
Board of Directors, email@example.com
General Manager, Liza Tedesco, firstname.lastname@example.org
Ownership and Outreach Coordinator, Joey Haney, email@example.com
Frequently Asked Questions
What are the benefits of patronage refunds?
Patronage refunds are a sustainable method of distributing profits. They help the Co-op to become more financially viable, which in turn supports the mission of CNFC in our community. Based on all types of cooperatives nationwide, patronage dividends are determined to be the “best practice”.
Patronage refunds, whether distributed or retained, reduce the Co-op’s tax obligations and keep money circulating in the local economy. Since the IRS allows us to retain up to 80% of the allocation, the retained portion provides a tax-free and interest free way to capitalize the business. In other words, it lets the Co-op reinvest in key components of infrastructure and development, making a better store for all of us!
How much will my refund be?
There is no way for us to know that year to year. Our profits will be distributed in direct proportion to a Co-op owner’s purchases made during the year. Remember, patronage refunds are dependent upon the Co-op’s financial status!
When will this take effect and what differences will I notice as a customer?
This will take effect early in 2013. There will be some changes to our sales fliers with added benefit to our co-op owners, but otherwise it will basically be the same great co-op, only with the added benefit of the Patronage Refund for co-op owners.
What do I need to do to get my refund?
1) Stay current on your shares. Goods purchased when your ownership has lapsed do not count towards your refund. Shares are $25.00 annually until a full investment of $300.00 is reached.
2) Make sure your contact information is up-to-date. The BOD may choose to send refunds in the forms of checks in the mail to your given address.
Who on the ownership receives the refund?
The patronage refund is given to the primary owner of the shares.
Do I still get my owner discounts?
Yes! Owners will still recieve owner-only sales and coupons. Owners who qualify for an additional discount will continue to receive it.
*In early 2013 we will be updating our register discount system. In place of our four discount categories (students, seniors, those with economic need, and those who are disabled) there will be one category based on economic need. This category reflects our desire to have healthy food be accessible and affordable to our entire community. Detailed information regarding this change is available in the Co-op and on our website.
Will Patronage Refunds cause any increased expense to the Co-op?
Our computer, register, and accounting systems are already set up in a way that will easily accommodate this change.
Will food costs be raised?
Your food costs will not increase as a result of implementing Patronage Refunds. Because your refund is proportional to how much you spend, you will benefit. At the end of the year following accounting you will be reimbursed based on the dollar amount that you spent at the coop. Refunds are the same, dollar for dollar, no matter what you buy at the co-op.
The co-op was started to bring me good food at great prices, why is it necessary to change?
Because we finally can! The co-op is doing well enough now financially that we’re able to make this improvement. Our BOD and management have researched this and consulted with other food co-ops, and we believe this is the best move for our co-op in order to continue making advancements and meeting our mission and goals.
How many hours annually will be required to run this program at what cost?
Initially there will be a modest investment in signs and other materials to let our community know that we have a great system in place for owners. After this, there will be a negligible, if any additional cost.
Will you deduct my annual fee from the refund since you are holding my money for a period of time?
No. As a owner of the co-op you make a yearly investment into the co-op. You may choose to put your refund towards the next year’s ownership fee.
Are you recording everything I purchase?
When you purchase something at the register, it is recorded for purposes of inventory. It is not a record we keep and access, associated with you and your personal information. We respect our customers’ privacy.