What is a Patronage Refund?

Patronage refund is the official name for how co-ops send profits back to their Owners. Here's how it works:

Willy Street Co-op provides its Owners delicious food and other fun things (the Annual Meeting & Party, Owner Appreciation Weekend, etc.). Every Owner purchase is recorded. When Willy Street Co-op is profitable, the Board and management review plans and financial obligations. The Co-op sets aside any profit needed to pay for those and records it in each Owner's account as non-voting equity in the Co-op. The money that is not needed to reinvest in the business is returned by check to the Owners. Your patronage refund is based on the amount of your purchases over the fiscal year (approximately July 1st–June 30th). Checks will be mailed several months after the end of the fiscal year.

When you get your check, the stub will mention the part of the profit Willy Street Co-op is reinvesting in the business. The law requires us to let you know about the retained portion of the year's profits in this manner. Co-op equity differs from stock in other kinds of business. It does not gain or lose value, it cannot be traded, and it doesn't increase your voting power in Co-op elections. It is really an accounting method that shows who the Co-op belongs to. That reinvested equity is our legacy to fugure generations.

Patronage refunds are NOT taxable income when they are returned to Owners. It's a refund, not a dividend. We'll remind you of this on the check stub as well!