Member Equity & Patronage Refunds F.A.Q.

Your democratically elected co-op board unanimously voted to end annual dues and most discounts at the cash register. Instead, we ask you to become (or continue to be) a member by buying one share in the co-op at a set price. In a year when the co-op makes a profit, you will receive a “patronage refund” based on the amount of your purchases over that year. The more you shop, the bigger your refund. Most US co-ops use this system. And, your equity purchase is a one-time cost, not an annual fee.

It will be credited to your account to offset future purchases. Alternatively, you can request a cash refund.

October 1, 2022

We’ve been losing money by giving discounts to members at the time of purchase (with nonmembers paying full price). Flat discounts don’t reflect the health of our business. Using

that model, we could be giving away earnings whether we have earnings to give away or not. Patronage refunds, on the other hand, are sustainable. Under the new system, when the co-op turns a profit, member-owners share in it. When the co-op has a hard year, we don’t want to jeopardize the co-op’s survival.

When the co-op’s founders began in 1976, the High Falls Food Co-op was virtually the sole source of natural and organic foods in our community. Back then, grocery stores saw net profits of 5 to 7 cents on the dollar. These days, there are many places to buy natural and organic food in our area and groceries operate at 1- or 2-cent profit margins. As Covid upended our world in 2021, we raised salaries to maintain our superb staff, which contributed to a 7.25% loss. Had it not been for government aid (the federal Payroll Protection Plan, and Small Business Administration loan, and a tax credit for employee retention), we would have been in serious trouble. That, plus losses from discounts, meant that things had to change. Building member equity puts us on a more sustainable path.

There are two big financial benefits to the co-op. First, income from annual dues is booked as revenue and is taxable. On the other hand, income from shares is booked as member equity and is not taxable. And as we build the member equity side of our balance sheet, the more attractive we become to banks that could help us expand our operations. We simply will be worth more. Second, our business doesn’t pay taxes on sales to members. That gives us more money to refund to members, as well as to reinvest in facilities, staff and growing our business.

Yes. To create equitable ownership, we’re eliminating family, senior and organizational/business memberships.

You previously paid a yearly membership fee of $40 per person or $55 per household. Now, each member or household will buy one common share in the co-op for $200, either all at once or in installments. If you choose installments, you can pay $40 annual payments for five years. Remember, your equity purchase is a one-time cost, not an annual fee.

If $200 is more than you can pay, we have a new Solidarity Fund available which can be used to cover a portion of your equity payment. If you apply for solidarity funds, you will be asked to pay what you can afford, according to our guidelines. The Fund operates on the honor system, without your having to show proof of income. Members who use the Solidarity Fund have full voting rights and member benefits. The fund is sustained by voluntary contributions from other members.

No, your membership is automatically transferred and the amount you owe toward the $200 will be pro-rated, based on the number of months since you joined/renewed after 10/1/2021.

Lifetime members will be asked to pay the difference between what they payed already and the $200 share price.

If you have not yet fully paid for your equity share when the board declares a refund, your patronage refund will automatically be applied to that balance.

Previously, most members received a 2% discount, while seniors and working members received 8% discounts. We’ve eliminated the senior membership but will keep our 5% -off senior discount day, which is available to non-members as well. Member-owners should use our Guidelines to determine if they qualify for a 10% Food for All discount, a new program members may apply for annually. We will continue to offer a working membership discount of 8% to members who commit to working 3 hours a month in the store. Staff will continue to receive a 20% discount. Board members will continue to receive a 15% discount. Member-owners will continue to have special sales, discount days, 10% discounts on special orders—and more to come.

Yes, up to four people per household. You can specify these people when you sign up and change them at any time.

Common shares are the only kind we have at this time.

No, you can buy just one share per person. Each share carries one vote. If you want to contribute more to the co-op’s success, please feel free to contribute to our Solidarity Fund.

Each membership has one vote and receives one patronage refund. Any additional shoppers on the account would need a separate membership in order to vote or receive a patronage refund.

You may request a refund of your equity. This request must come in writing to the board of directors, who determine the co-op’s ability to pay back the equity based on the co-op’s financial status at that time. If you have been buying into equity over time, your refund will be limited to the actual amount you’ve paid in. If you joined via the Solidarity Fund, you get back the equity you paid in, not the full $200.

No. Tax law says year-end distributions technically are considered the return of an overcharge to members. That is, members are understood to have been charged more than was necessary to successfully operate the business that year.

The new member-ownership structure has no effect on prices. However, we’re already working to lower them through other means. We’ve gained buying power by joining National Co-operative Grocers and making better deals with local vendors. We’re stocking our shelves with many lower-cost “house brands.” And we’re taking steps to attract more shoppers to our co-op, to bolster our bottom line. Please be aware that prices are rising everywhere, and we are doing everything we can to keep our prices low.

1. First, thank you for being a member-owner. Buy your full share. Not a member-owner? Become one!

2. Second, if you can afford it, contribute to the Solidarity Fund to help more shoppers become members.

3. Third, shop, shop, shop at the co-op and spread the word among your friends. We’re all in this together!