Credit Union and Cooperative Patronage Refunds - Filene ...

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Fourth, we examine how members of the Farm Credit System use patronage refunds. Fifth, we examine the payment of patronage refunds by three credit unions. Finally, we conclude by addressing potential future tax implications of patronage refunds for credit unions. As you read this report, it may help to remind yourself from time to time that we weave the disciplines of finance, accounting, and tax together with co-op theory. One of the consistent themes and tension is whether to allocate earnings other than what the co-op pays as a cash patronage refund. 5
CHAPTER 1 Patronage Refunds Are More Than Rebates (and Co-ops Are More Than IOFs) Cooperative principles govern the use and allocation of capital. Members who own capital generally have that ownership acknowledged and recorded. Cooperatives have to balance the use, distribution, and accumulation of capital carefully to serve current and future members.
Page 1 and 2: Credit Union and Cooperative Patron
Page 3 and 4: Copyright © 2011 by Filene Researc
Page 5 and 6: Acknowledgments We appreciate and a
Page 7 and 8: List of Figures 1. Average of 27 Cr
Page 9 and 10: What Are the Credit Union Implicati
Page 11 and 12: Introduction There are many ways in
Page 13: to us is a philosophical gulf betwe
Page 17 and 18: activities with their credit union
Page 19 and 20: members standing on the basis of ow
Page 21 and 22: epayment, and/or if the asset is on
Page 23 and 24: If the co-op’s earnings are not d
Page 25 and 26: principles. When we discuss other c
Page 27 and 28: A recent post to the Filene Researc
Page 29 and 30: Our response to the blog post quest
Page 31 and 32: The subject of this chapter is a th
Page 33 and 34: CHAPTER 4 Tax Differences between C
Page 35 and 36: Figure 2: Contrast Statutes Governi
Page 37 and 38: Patronage earnings that are allocat
Page 39 and 40: When rural electric cooperatives ar
Page 41 and 42: CHAPTER 5 Use of Patronage Refunds
Page 43 and 44: Figure 4: Present Value of Patronag
Page 45 and 46: y row 9). All in all, this is a ver
Page 47 and 48: Badgerland, all of this association
Page 49 and 50: AgGeorgia’s members probably expe
Page 51 and 52: All three credit unions use their p
Page 53 and 54: The capital accumulated through ear
Page 55 and 56: As we visited with Hanson, it was d
Page 57 and 58: on share deposits is not a patronag
Page 59 and 60: Patronage Refunds: A Differentiator
Page 61 and 62: Figure 6: Potential Tax Effects of
Page 63 and 64: ather than later, particularly if t
Page 65 and 66:
of the cooperative were deducting t
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Patronage Refunds and Capital M ana
Page 69 and 70:
Appendix Exhibit A: 2007 Newsletter
Page 71 and 72:
Due to careful planning and prudent
Page 73 and 74:
Think of how much more you, and oth
Page 75 and 76:
contrast, the 27 credit unions paid
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to redemptions. Think Diamond Walnu
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