PATRONAGE DISTRIBUTIONS 

A big change came to our Co-op in January of 2019, one that the Board of Directors approved in November 2017 after years of discussion. 

 

Since Fare Share’s incorporation in 1978, we have automatically offered owner discounts at the cash register. Currently, every item in the store has two prices: one for owners and one for non-owners. Not only has this made a lot of work for our staff (especially since inventory has increased by 40% in the last four years), it also means that we are giving away profits before we know whether they exist. In fact, in 2016, we “gave away” more than $24,000 in discounts, most of which were attached simply to ownership, not to volunteering.

 

Since we moved to Main Street, our General Managers have been challenged by this operational reality. Other co-ops have shifted to or initially adopted a different system for returning profits to the owners, a system called Patronage Dividends (PD).

 

Here’s how PD would work. Under a PD system, everyone pays the same price (owners who volunteer at least 4 hours per month would still earn volunteer discounts). After the finances for the year have been recorded and the profits calculated, a percentage of those profits could be reinvested into the business (as decided by the Board and GM) and the remainder (at least 20% according to the tax code) would be divided among the owners based on the amount of “patronage” or spending they have done in the twelve-month period. If I spent $5000 at the Co-op, I would receive a bigger dividend than an owner who spent $500.

 

“There is nothing like a check in the mail to remind one of the meaning of ownership!”

 From Patronage Dividends for Food Co-op: A Primer on Distributing Earning and Building Member Capital

 

To help us better communicate among our ownership, our Finance Committee will be starting a blog called “We Own it—OMG!” This shift to Patronage Dividends is one piece of the whole financial puzzle and the discussion on this blog will address more pieces and a broader understanding.

I would like to ask each owner to do three things in 2018:

  • Read the five newsletters.

  • Send questions or comments to us. Engage!

  • Attend an informational session.

 

This shift to Patronage Dividends is one good way to celebrate our 40th birthday. It’s like one of those practical gifts that will make our cooperative fiscally stronger and more resilient, kind of like a rugged new coat. Oh, and we’ll have a very impractical street dance/birthday party after the snow melts, so stayed tuned!

 

Thank you so much for your continued interest in and dedication to our co-op. Let’s keep educating ourselves and allowing change to move Fare Share into greater financial health.

In solidarity and cooperation, THANK YOU!

Lisa Moore, BOD President

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