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Author Topic: Balancing Member Benefits with Service  (Read 4829 times)
Ingrid Naiman

Posts: 27

« on: July 28, 2008, 09:37:19 PM »

Many people who have contacted me privately have "pet projects" that cover a fairly wide range from outreach programs on organic gardening through public schools to global endeavors to shift climate patterns.  In theory, the co-op is not under any obligation to use profits to fund service to the community so here is where there are delicate matters to balance.  One can refund all profits to members or reserve the right to retain a certain amount to finance other endeavors. 

Some of the possibilities that I have personally considered are clinics, special alternative insurance plans, alternative credit cards, green energy equipment, organic farms, global villages, and testing facilities for quality as well perhaps as seldom diagnosed human conditions such as parasites and mold.

Once again, we are only at the very beginning, two weeks into this plan, so limits are where the imagination stops.

Posts: 3

« Reply #1 on: July 29, 2008, 07:41:05 AM »

On the subject of profits. We must consider that money will need to be put into the endeavor for such things as insurance (liability, losses, etc.), operations (equipment, facility,), personnel (paid employees), product (purchase, inventory, storage, packing, shipping). Markup: even if items are purchased at cost it's not realistic to pass them on to co op members at the same cost. We would lose money. I suggest figuring a percentage of the cost, say 8%, that would include the items mentioned above plus some wiggle room for unforseen things. Only after that can we think about a profit, or so it seems to me. This "minimum markup" is still a deal and the items would still be below retail, even retail 'sales'.

Once profits are figured then again, a percentage could be paid out at the end of the year but in time for the members to report it for taxes (yes, these profits are 'dividends' and are taxable). I belong to two co ops already and this is how they operate.

One co op pays out a portion of the profits annually. The rest of the dividend earned is "invested" and the co op member gets with the annual dividend a printout saying how much money has accrued in the 'investment'. This 'investment' is paid out to the co op member when they leave the co op or at their death to the estate or beneficiary.

The other co op pays out the dividend earned in say year 1 only after year 5. In the meantime, it's my understanding that money is used for the co op business. Hopefully this makes sense.

Also, on the subject of services to the members, those need to be spelled out specifically as this becomes a contract. So for example: members have the right to purchase specific items at X% over cost, the orders filled within X number of days, notice of backorders within X number of days, policy for returns and under what conditions, exact source of items purchased, date of manufacture or expiration dates, storage conditions appropriate for products, conditions of manufacture as affecting ethical concerns of members (fair trade, sustainable productions etc.); financial reports quarterly, abbreviated and specific annually. These are just some ideas.

Before we can discuss the ideas of what to invest the profits in, the nitty gritty of the basic financial cycle for the business needs to be worked out. Once that is moving successfully then the happy task of what to do with the profits can take place.

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