PT Food Co-op

The Food Co-op, 414 Kearney Street, Port Townsend, 98368
Port Townsend
Phone: (360) 385-2883


What are patronage dividends?

One perk of being a Food Co-op member is the patronage dividend. Called ‘cooperative dividends’ by the Rochdale Society of Equitable Pioneers back in 1844, patronage dividends are based on the Third Cooperative Principle:  Member Economic Participation.

Food Co-op member-owners voted in 2014 on bylaws enabling us to adopt patronage dividends. Through these dividends the Food Co-op can both save money and return surplus funds to our member-owners.

How does it work?

Each year, if the Co-op makes the 1% net profit, as set by the board, we can declare a dividend and return it to the members. Each member’s dividend will be based on how much they’ve spent. A portion of the dividend will be kept to re-invest back into the business- either as a financial cushion for lean years or to help finance a facility project, such as a remodel or expansion.

Here are the steps:

  • All Year: Staff tracks operational profitability and reports to the board.
  • March: A CPA reviews and adjusts our financial statement.
  • April: Staff recommends whether or not to declare a dividend based on financial results. Board votes and makes a decision.
  • May: If board declares a dividend, staff notify members via email or post.
  • May/June: In years when dividends are declared, an announcement will be made at the Annual General Meeting. The Food Co-op distributes dividends at the register. Members can put their dividend toward their purchases, request a check for the full amount or donate the dividend to our GROW FUND. *The Grow Fund, in cooperation with Twin Pines Community Fund, is a fund that we will use to grant a local non-profit, chosen yearly by committee, that matches our four pillars of community sharing.  Look for more info on how to apply mid summer 2018.


What are patronage dividends?

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.

Why initiate a patronage dividend system?

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.

How much would the dividend be?

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 a 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.

How will I get my dividend?

Members will receive vouchers that could be used toward purchases, redeemed for cash, or donated to the Grow Fund, our Cooperative Community Fund which helps grow our impact in our community

Do I have to pay income taxes on the patronage dividend?

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.

What was the process to initiate a patronage dividend system?

To satisfy various laws and regulations, the Food Co-op’s Articles of Incorporation was 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 was distributed in 2016, after we knew whether or not we had a profit for 2015.

What if I still have questions?

You can contact the General Manager, Kenna Eaton, at 360-385-2283 ext. 303, or Dan Goldstein, Controller, at 302, or the Board at