Many of us own shares of publicly-held companies in our retirement accounts, so we’re familiar with the idea of shareholders getting a portion of the company’s profits as dividends.
But you don’t have to be a shareholder to share in the financial success of cooperative businesses.
Co-ops are owned by members, typically the company’s customers or its employees. When cooperatives are financially successful, they can return some of their profits to their members as patronage dividends.
“Across the U.S., cooperatives provide $75 billion in annual wages and generate $650 billion in revenue,” said Emily Nail, Executive Director of the Cooperative Council of North Carolina. “Cooperatives are on the rise, because they are serving the members that own them.”
Locally, Coastal Credit Union is a co-op that aims to return a patronage dividend to its members each year. For the past eight years, Coastal has paid a special dividend – or Loyalty Bonus – to its members early in the year, based on the previous year’s results.
“As a member-owned cooperative, we’re in a unique position to both work to help our members improve their personal financial situation every day, and then share our financial success with them at the end of a profitable year,” said Chuck Purvis, Coastal’s president and CEO in a press release.
Earlier this month, the credit union issued more than $3.3 million in Loyalty Bonus dividends to 63,500 members. It was the company’s largest payout to date in terms of dollars and recipients. Payouts were determined by members’ overall participation in the credit union, determined by the total value of their loans plus deposits, with a multiplier for the length of their membership.
“In North Carolina, we have around 250 cooperative organizations, which can be found in every industry and can almost certainly provide a solution to any community needing products or services,” said Nail.
Headquartered in Wake Forest, Wake Electric is an electric distribution cooperative with more than 42,500 customers in Durham, Franklin, Granville, Johnston, Nash, Vance and Wake counties. Last year, Wake Electric returned more than $1 million in profits to 25,000 of its members, according to the company website.
One of the best-known cooperatives is the outdoor-oriented retailer REI, which has local locations in Cary, Raleigh and Durham. Depending on how much they spend annually, REI members get a dividend in March, which can be redeemed for cash or merchandise at REI stores or online.
Weaver Street Market, the Carrboro-based natural foods grocery store, pays two types of patronage dividends in years when it is profitable. The consumer patronage dividend is based on how much their consumer-owners spend, while the worker patronage dividend is based on how many hours a worker-owner works.