Patronage Dividends

 

We are excited to announce the Food Co-op’s sixth Member Dividend Distribution!

Thank you for supporting your co-op during what turned out to be another challenging year. Even with all the forces working against us in 2022 – ongoing supply chain disruption, labor shortages, and the rising cost of goods – we had a successful year managing to achieve positive sales growth while maintaining profitability. It took all of us working together make this magic happen.

Our members chose to shop at the Co-op because of the value they receive beyond price, such as our support of local producers, trust in the integrity of our products, our helpful and friendly staff and the intimacy and sense of community they feel when shopping at the Co-op. Our secret sauce is our ability to pivot and adapt to change, as we did during the pandemic, the expansion, and all the other challenges we have faced in the past 50 years. By doing so, we can turn present challenges into future opportunities to improve and grow our local economy and keep our co-op strong!

This year the Board voted to retain 80% of the total dividend and distribute 20%. This way we can keep building our reserves for what promises to be an interesting next few years. We will begin the dividend distribution July 5, 2023.

It's easy to redeem your dividend. The next time you shop, tell your cashier whether you want to redeem your dividend, donate it, or get the dividend in the form of a check. Please note that the last date to redeem these distributed dividends is December 31, 2024. Any dividends not redeemed by then will be considered donated to The Food Co-op per our bylaws.

Donated dividends will be invested in our Grow Fund, an endowment fund housed by the Twin Pines Co-operative Community Fund (TPCCF). Money in the TPCCF is loaned to co-ops across the country to help them get started or grow, and the interest earned on those loans comes back to us, so we can in turn donate it to nonprofits in our community. And as our fund grows, the amount we can give back grows as well – it’s a cooperative cycle of growth! Annually we will grant those funds to local nonprofits whose values match our four pillars of community sharing:

1.    Improving food access

2.    Sustainable agriculture, land & sea stewardship

3.    Healthy kids - healthy families

4.    Supporting the cooperative model

You’ll notice that dividends are not large – the average is $7.35, although some are smaller and a few are quite a bit larger. This all depends on how much you shop at the Co-op, since your portion equals 0.36% of the total you spent at the Co-op in 2022.

For more information on how dividends work, including FAQ’s and definition of terms, see our website at www.foodcoop.coop

Thank you for supporting your Food Co-op – we couldn’t do it without you!

Sincerely,

Your Food Co-op Board

Juri Jennings, Michael Flowers, Owen Rowe, Lisa Barclay, Claire Thomas, and Dave Dunn

 

FAQs

  • In a patronage dividend system, when a co-op makes a profit, its members receive part of those profits as a dividend or “refund.” Each year the board of directors of the co-op determines if their co-op can afford to distribute dividends, and then dividends are determined by how much each member spent during the year.

  • It would save the Food Co-op money and enable us to return a portion of the profits to our members, keeping more money in the community. Currently, the Co-op usually pays more than 30% of our profits in taxes. A patronage dividend system would allow us to keep that money.

  • Dividend payments would be based on the Food Co-op's profit and how much you spend at the Food Co-op during the year. The more you spend, the larger your dividend. Remember, though, the Co-op aims for just 1-2% profit, so dividend payments will never be large.

    Each year, the Board of Directors would determine how much, if any, of the Co-op's profits would be designated as patronage dividends. According to IRS rules, at least 20% of the profits designated as patronage dividends must be distributed to the owner-members as cash or the equivalent. The Board may choose to retain the balance as equity, which the Co-op could use for such things as capital improvements or debt reduction. In essence, this enables us to transform taxable profit into member investment in the Co-op. The actual ratio of retained and distributed dividends will vary from year to year, depending on the amount of profit and the Co-op's needs.

  • It's easy to redeem your dividend. The next time you shop, tell your cashier whether you want to redeem your dividend, donate it, or get the dividend in the form of a check. Please note that the last date to redeem these distributed dividends is December 31, 2024. Any dividends not redeemed by then will be considered donated to The Food Co-op per our bylaws.Funds will be donated to the Grow Fund, our Cooperative Community Fund which helps grow our impact in our community.

  • No, patronage dividends are not taxable income unless your purchases were for business purposes rather than personal use. If this is the case for you, please consult your tax adviser. Otherwise, patronage dividends are essentially a refund of money you spent in the store.

  • To satisfy various laws and regulations, the Food Co-op's Articles of Incorporation were modified, and that required a vote of the membership. We held a general meeting, followed by a 25-day voting period, We met the requirements and began keeping the necessary records January 1, 2015, and the first dividends were distributed in 2016, after we knew whether or not we had a profit for 2015.

  • You can contact the General Manager, Kenna Eaton, at 360-385-2883 ext. 303, or Tony Hillman Finance Manager, at 302, or the Board at coopboard@foodcoop.coop.