Although the idea of a cooperative business or enterprise had been around for a while, it was in the 1840s in Rochdale, England, that a group of citizens created the first cooperative. Known as the Rochdale Equitable Pioneers Society, their goal was to improve working conditions, raise low wages, and make food and other goods more affordable.
The 28 artisans created a set of principles and values, which endure as the backbone of the co-ops we know today. The Rochdale Principles include the idea that profits should be divided among members in proportion to the amount of purchases made by each member. What does that mean for you, a member-owner of Hunger Mountain Co-op? It means, if you shopped here last year, you are receiving a patronage refund.
The Co-op’s council determines the patronage refund based on the portion of profit associated with purchases by member-owners during a fiscal year (early July to late June.) The Council then decides how much of that profit to distribute to members and how much to retain as collective capital to strengthen the Co-op. The proportion depends on cash needs, capital investment needs, and building capital needs, among others. Legally, a co-op must return at least 20% of the total refund amount. Because we are a consumer co-op that sells products for personal use, neither the Co-op nor its members are required to pay taxes on a patronage refund.
In the fiscal year 2019, our cooperative earned a taxable income of $173,652 before determining a patronage refund and income taxes. The Co-op’s council declared a patronage refund of $135,754, the maximum allowed under IRS rules. Because the majority of that net income came from a one-time transfer of equity invested by members who have stopped shopping at the Co-op for at least three years (per our bylaws), the Council decided to distribute 20% of the refund to member-owners as required by the tax code. The Co-op will retain the other 80% to invest back into capital improvements and debt repayment. Retained patronage is associated with individual members so that the balance could be returned to them in future years if the Council chooses to.
Patronage refund letters will begin appearing in member-owners’ mailboxes on March 2. If you receive a letter in the mail, return the bottom of the form to the Co-op for one of three options:
1. Apply your refund to your purchase.
2. Ask for your refund in cash at any register.
3. Donate your patronage to our Give Change recipient organization of the month.
Our Give Change program allows you to support a local nonprofit organization or community partner by rounding up your purchase at the register. By doing so, you are participating in a collective effort to support organizations and programs that have a direct impact on our local community. You can find out more about the program and opt in to being asked at checkout to round up your purchase to the next dollar at our website here.
In March, the Give Change recipient will be the Hunger Mountain Cooperative Community Fund (HMCCF). This fund provides grants to local organizations whose work aligns with our mission to support healthy communities and sustainable local food systems. In April, your patronage and Give Change donations will benefit the Friends of the Winooski.
As per tax code and the Co-op’s bylaws, you must use or donate your patronage refund within 90 days. Contact us if you cannot make it to the Co-op within that time frame. Outstanding patronage refunds will be void 90 days from the date issued and donated to the Hunger Mountain Cooperative Community Fund (HMCCF). If you have any questions about patronage refunds, please email us or call (802) 262-3202.
Although patronage refund availability and distribution is not a guarantee each year, and the amount will vary from year to year, it is a benefit for our members. If you are not a member, join today for $15 by visiting customer service or by filling out a new membership form online.