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How patronage rebates work

Under Wisconsin State Statute 185, a cooperative business is structured so that it only has to pay taxes to the government on profits from sales to non-owners. All profits generated by sales from the co-op’s owners are considered to be “excess payment for goods and services” and the money needs to be rebated back to the owners.
Your rebate will be based on how much you spent at the co-op during that fiscal year. An example would be if the total profit on sales to owners was 1%, then your rebate would be 1% of what you spent at Outpost during that fiscal year. Outpost’s fiscal year runs from October through September. So if you became an owner in the middle of a fiscal year, say in March, the purchases you make between March and September would count towards a rebate. If there isn’t a profit during a fiscal year, there is nothing to distribute.

Retained patronage

Since Outpost doesn’t get a return on stock like publicly-owned companies, there are only two ways your co-op has to generate cash: through new owner equity and profits on sales. We need this money to make improvements to your stores, such as new equipment, buying additional inventory, or adding new services. While the law requires us to return a minimum of 20% of your profit as cash, it also allows your co-op to keep up to 80% of the rebate to use for those types of business improvements. The money that is kept is called “retained patronage.” This money belongs to the owners and records are kept for each owner who has a retained patronage, for every year any patronage is distributed. It’s up to Outpost’s board of directors to determine when the retained patronage will be distributed at a future date.

About your rebate

Outpost’s Bylaws allow the board of directors to set a policy for a minimum rebate. The minimum amount for the cash portion of the rebate is set at $1.00. In addition, rebates that are distributed but not cashed by the owner within 90 days, means the entire rebate for that owner is forfeited.
The law determines that we must distribute the cash portion of a patronage rebate prior to nine months after the fiscal year has ended (which would be June), although it has been our practice to mail the check within six months after the close of the fiscal year (which would be March).
Along with other owner benefits, patronage rebates offer true savings to Outpost owners. By supporting your community cooperative with thousands of other owners, you too are making a commitment to health, the community, and cooperation.

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