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Arthur Capper Cooperative Center


  • What Are Patronage Refunds?
    • http://www.rd.usda.gov/files/cir9.pdf
      • This pamphlet describes cooperatives and outlines the basic principles under which they operate. It also defines and discusses the patronage refund. Includes frequently used terms that describe the unique features of cooperatives. Also covers finance and tax aspects, equity redemption, net margin, per-unit retain, pooling, and others. Related publications available are also listed.
      • CIR 10. 24 pgs. 1995. Galen W. Rapp.
      • Library ID Number: 2423
  • Income Tax Treatment of Cooperatives: Patronage Refunds
    • http://www.rd.usda.gov/files/cir44-2.pdf
      • This publication covers patronage refunds-which help distinguish cooperatives from other forms of business. By permitting cooperatives to retain part of the margins designated as patronage refunds, members provide needed equity to the association. This report discusses how to differentiate between patronage and non-patronage business. Other topics cover per-unit retains, refund distributions, redemptions of patronage equity, and taxation of patrons.
      • CIR 44, Part II. 71 pgs. Reprinted 1996. Donald A. Frederick and John Reilly.
      • Library ID Number:2869
  • Nonqualified Notices: An Alternative for Distributing Cooperative Earnings
    • http://www.rd.usda.gov/files/rr80.pdf
      • Nonqualified patronage refund and per-unit capital retain allocations offer an alternative to allocate patron equity that may have advantages over methods used by most cooperatives. This report concludes that nonqualified allocations can be used to delay patron taxes and income and avoid negative cash flows due to taxes. They also offer cooperatives an additional tool for tax planning, tax management, and handling losses.
      • Research Report 80. 61 pgs. 1989. Jeffrey S. Royer and Roger A. Wissman.
      • Library ID Number: 2444
  • Cooperative Members’ Preferences for Patronage Refunds – Brian Briggeman and Quatie Jorgensen
    • https://www.emerald.com/insight/content/doi/10.1108/00021460910960480/full/pdf
      • Many associations in the Farm Credit System, which are financial cooperatives, pay their member-borrowers a cash patronage payment based on the amount of loan volume with the association. In today’s competitive lending environment, some Farm Credit associations have offered lower interest rates on new loans but these new member-borrowers’ preferences for patronage refunds received as a cash payment versus lower fixed real estate interest rates.
      • The results of this study show that member-borrowers strongly prefer patronage refunds compared to lower fixed interest rates.
      • Library ID Number: 7647
  • Retained Cooperative Earnings: Redemption vs. Securities Exposure—Ken D. Duft
    • http://www.agribusiness-mgmt.wsu.edu/ExtensionNewsletters/coop/RetCoopEarn.pdf
      • The practice of retaining patronage dividends is deeply ingrained in agricultural cooperatives. In the absence of such member investment, cooperatives would be ill prepared to provide those products and services required by members. Yet the act of retaining dividends and issuing equity certificates to member-patrons should not be taken lightly, as such instruments may be judged to be securities under the federal Securities Acts of 1933 and 1934. The indefinite nature of risks under the Acts and the expense of compliance have confronted cooperatives with a difficult choice. Most have decided to accept the risks of potential liability to dissatisfied members. However, a review of court cases would suggest that all cooperatives should look at their current operations and practices regarding this possible securities exposure. While no court has yet ruled the retained patronage dividends of a cooperative constitute a security under terms of the Acts, the mere threat of litigation may be a sufficient incentive to initiate precautionary measures.
      • Library ID Number: 7648