How returns demonstrate respect to owners

As cooperatives, we have a responsibility to provide patronage dividends to our owners. But when does a company decide to provide returns to owners?

While it may seem logical that discussions about returns begin around fiscal year-end, in actuality, a well-run company begins discussions during the fiscal year-end of the preceding year.

Plan ahead for best results

In order to guarantee returns to owners, a responsible cooperative company will include dividend distributions in next year’s budget. By including distributions in the budget, management is now responsible for results inclusive of dividends. Dividends are a budget line item for the current year but were discussed and approved at the conclusion of the last fiscal year.

Discussions of the returns to owners are typically organized into three main categories. First is the amount that is re-invested into the company. Is the re-investment amount sufficient to develop and deploy the products and services that our owners need? In addition to providing the products, another consideration is whether these products and services are priced appropriately.

 

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