Seward Co-op now offers two additional options for purchasing memberships: an installment plan and a reduced-initial-investment option for those who meet any one of three needs-based criteria.
The installment option will allow a new member to split the $75 class A equity cost into three payments over six months ($27/$24/$24).
For new members who are currently enrolled in Minnesota Food Assistance/Support, Minnesota Health Care, or Social Security Disability Insurance, a new membership can be purchased for an initial equity investment of $15. These memberships will earn their remaining $60 of member equity through future patronage refunds.
A patronage refund is the return of the portion of the co-op’s profit that came from sales to members (more information below). In this case, the patronage refunds will be converted to class A stock until their combined total reaches the full $75 cost of membership.
The foundation of Seward Co-op is our community of member-owners. We’re excited that these new initiatives will grow our community by improving accessibility to participation.
About Patronage Refunds
Our co-op continues to be very successful, beyond our greatest hopes, and this accomplishment could not have happened without the support of our members. In profitable years, Seward's board of directors declare a patronage refund to its members — the return of the portion of the co-op’s profit that came from sales to members.
In fiscal year 2011, sales totaled $24,746,872 (a 16 percent increase over the prior year). Our net income before patronage refund was $893,206. Seventy-four percent of sales were to members, so 74.4 percent of the co-op's net income ($664,545) became the patronage refund. At Seward, normally 20 percent of the patronage refund is distributed in cash, and 80 percent is allocated to individual member accounts but held by the co-op as equity*.
*Note: equity is the same thing as Class B stock.
Why does the co-op retain 80 percent of the refund?
The ability to retain significant cash, tax-free, builds the commonwealth of our community. Retained equity gives the co-op a significant resource to address future needs and to achieve our long-term goals. Since moving into our new building, member equity has been used for capital improvements — including the installation of solar panels, the remodel of the front entryway, and new production equipment for the Deli and Meat departments.
Is the patronage refund taxable?
No. Because the individual refund is a deferred price reduction on goods purchased, a member’s share of the patronage refund is NOT considered taxable income.
How is the refund distributed?
As in past years, we distribute it electronically. Members may use their patronage refund for in-store purchases or redeem it for cash at the registers or Customer Service desk. Or members may donate it to the Seward Community Fund (SCF).
Those using the needs-based option to purchase a membership must have their membership balance paid in full before receiving patronage refunds. Prior to that, refunds will be applied towards membership 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 and recipients are announced by the annual membership meeting in 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 member donate his/her refund to the SCF?
Members who wish to donate 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 Financial Manager Alex Betzenheimer at abetzenheimer@seward.coop or 612-465-0882.
