We are pleased to share the good news that the Board of Directors has declared a patronage refund for the fiscal year that ended on June 30, 2022. This is our first patronage refund since 2015.
One of the key differences between cooperatives and corporations is what we do with profit. Broadly speaking, we use profits for similar types of things: paying taxes, reinvesting in the business, and making distributions to owners. That last one—distributions to owners—is where we have the greatest difference. In addition to increased stock prices, corporations distribute profits back to their shareholders through means like stock buybacks and dividends. The more shares of stock one owns, the more profits one receives. In other words, wealth grows more wealth.
As a cooperative, we have a different way of distributing profits: the patronage refund. Every owner of Seward Co-op buys the same $75 of Class A stock to become a member. All Seward Co-op owners own the co-op equally: one member, one vote. So rather than distributing profits based on how much stock someone owns, we distribute profits based on how much someone shopped at the co-op. “Patronage” just refers to patronizing (shopping at) a business, and we are refunding part of the money spent at the co-op.
About the 2022 Patronage Refund
Sales in fiscal year 2022 totaled $39,728,563 — a 4 percent increase over the prior year. Our net income before taxes and patronage refund was $2,020,318. This net income was largely due to $3,139,207 in debt forgiveness income due to the conclusion of the New Market Tax Credit financing we received for construction of the Friendship store seven years ago. Our over 23,000 owner households accounted for over 78 percent of co-op sales, resulting in a total patronage refund $789,565. This accomplishment could not have happened without your support. In this past fiscal year, co-op owners also saved $791,297 through the quarterly 10% discount benefit and the Nourish (needs-based) discount, bring total owner savings to over $1.5 million. We sincerely appreciate your ownership and patronage.
The patronage refund may be distributed to owners in two forms: cash and equity (reinvestment shares in the co-op). By law, the cash portion of the patronage refund must be at least 20 percent, allowing the co-op to retain up to 80 percent as equity. The retained equity portion stays with the cooperative and is used to ensure that our cooperative is here for future generations. As in previous years, the Seward Co-op Board of Directors has elected to distribute 20 percent of this year’s patronage refund as cash, retaining 80 percent as equity.
The board’s decision to retain 80 percent of the patronage refund as equity allows our co-op to build the healthy community envisioned in our Ends Statement. Retained equity gives the co-op the resources to address future needs and to achieve our long-term goals. The retained equity from prior years’ patronage refunds made the Friendship store possible. The Friendship store in turn increased the positive impacts the co-op has on our community. Building locally, buying locally, hiring locally – these are all ways the co-op keeps our money circulating in our community.
Information for Co-op Owners
We will distribute the patronage refund by applying a credit to owners’ accounts in our point-of-sale system. You can ask about the amount of your credit at the registers or Customer Service desk. Each owner can use that credit any time before June 30th of next year (or donate it—see below). You may use this for in-store purchases or redeem it for cash at the registers or Customer Service desk.
The Patronage Refund is a bit like a retroactive discount on your shopping trips throughout the year. Someone who spent about $100 per week will get a cash refund of around $30. The cooperative does not pay taxes on this amount, and because your individual refund is a deferred price reduction on goods you purchased, your share of the patronage refund is not considered taxable income to you.
Donate Your Refund
Owners have the option to donate their patronage refund to the Seward Community Fund (SCF) or the Seward Co-op PTO Pool. The SCF is an endowment fund established by the co-op in 2005 to share our success within community. The interest earned on the SCF is given to nonprofits and/or cooperatives in our community. Each Community Choice SEED recipient finalist receives a $1,000 grant from the SCF Fund. The PTO Pool provides paid time off for staff who have used their PTO hours but have an additional need (medical emergency, etc.).
If you wish to donate your patronage refund, simply tell our staff at the registers or the Customer Service desk. At the end of the fiscal year on June 30, 2023, all unclaimed patronage refunds will be donated.
We hope you are as proud as we are to be part of Seward Co-op and that you join us in looking forward to another great year.