As our co-op continues to grow, we have reached new levels of financial success. An important aspect of this success is the patronage refund. In years in which the co-op is profitable, the board of directors declares a patronage refund. The patronage refund returns a portion of the co-op’s profit to our members, while also reinvesting profit in our continued growth.
In fiscal year 2013, sales totaled $30.5 million, a 9-percent increase over the prior year. Sales to owners accounted for a record 76 percent of sales, resulting in a record patronage refund of $777,183. Of that, 20 percent of the refund was returned directly to owners in the form of cash or store credit. The other 80 percent was allocated to individual owner accounts, but held by the co-op as equity.
Why does the co-op retain 80 percent of the refund?
The board of directors, as the elected representatives of the co-op's owners, decides each year on the percentage of the patronage refund to distribute directly and the percentage that should be retained. Since the mid-1980s, Seward Co-op has retained 80 percent of each patronage refund we have declared. This is, in essence, an ongoing investment in our cooperative by the owners. The ability to retain significant cash, tax-free, builds our community’s commonwealth.
Is the patronage refund taxable?
No. Because the individual refund is a deferred price reduction on goods purchased, an owner’s share of the patronage refund is NOT considered taxable income.
How is the refund distributed?
As in past years, we distribute it electronically. Owners may use their patronage refund for in-store purchases or redeem it for cash at the registers or Customer Service desk. Or owners may donate it to the Seward Community Fund (more information below).
Those using the needs-based option to purchase an ownership must have their ownership balance paid in full before receiving patronage refunds. Prior to that, refunds will be applied towards ownership balance.
What is the Seward Community Fund (SCF)?
The SCF embodies Seward Co-op's commitment to continue to grow not just as a business, but also as a resource that takes the concerns of our community to heart and to action. Seward Co-op launched the SCF in 2005, as an endowment fund to which individuals may donate money that will, in turn, earn interest. As the fund grows, the interest earned is given to nonprofits and/or cooperatives in our community. Grants funded by the SCF are awarded annually. Applications are reviewed by the co-op grant committee, comprised of staff, and recipients are announced by the annual co-op owners meeting each October.
Grants are given to organizations that fit our mission and are engaged in one or more of the following activities:
• Environmental projects focusing on protection and/or beautification
• Sustainable agriculture programs
• Cooperative related activities
• Community development and capacity building
How can a co-op owner donate their refund to the SCF?
Owners who wish to donate the cash portion of their patronage refund to the SCF may do so at the registers or the Customer Service desk.
Who to contact with questions:
Questions regarding patronage refunds or the SCF can be directed to the co-op's Financial Manager Alex Betzenheimer at abetzenheimer_AT_seward_DOT_coop, or 612-465-0882.