Patronage
When you sign up for phone service through Canby Telcom, you will pay a nominal membership fee and become a member of the association. This establishes your equity interest in the association. In other words, you "own" a piece of the business. The membership elects a board of directors to represent member's interests, set policies and ensure the company's success.
Frequently Asked Questions
What are capital credits?
Canby Telcom is a cooperative. Remember when you signed up for telephone service with us? You paid a $1.00 membership fee to join the association. This establishes your equity interest in the association. In other words, you become a part owner of Canby Telcom. As a nonprofit organization, Canby Telcom seeks to provide members with the highest quality service at the most affordable rates. At the end of each fiscal year, Canby Telcom allocates margins to each member on a prorated basis according to the total amount paid for telephone services. These allocations are known as patronage dividends. Upon approval of the Board of Directors, these allocations are refunded to our members through patronage distributions.
What is a patronage allocation?
Patronage allocation is the term applied to the act of determining each member's share of the margin and the notification to the member of what their individual allocation for the year is.
What is a distribution?
Actual payments, called distributions, are made at the discretion of the Board of Directors.
Why are patronage allocations not paid-out when allocated?
Net margins are a source of working capital provided by the members and are used by the co-op for any proper purpose such as facility/plant upgrades and payment of debt.
How often does the Board of Directors declare that a distribution should be made?
According to the cooperative bylaws, "Credits... may be retired by the Board of Directors at its discretion and direction as to timing, method and type of retirement." There is no schedule as to when distributions are made. Previous distributions were made in the years 1982, 1989, 1996, 1998, 2002, and 2007.
Why aren't 1999 and 2000 listed?
1999 and 2000 were retired in the last distribution.
Do I need to contact the cooperative each year to see if any distribution has been declared?
Current customers of the cooperative (those who currently get their local phone service through the cooperative) will automatically get any distributions declared mailed to them at their billing address. Those members who no longer get local service from the cooperative will be mailed a distribution notice to their last known address. This notice will contain a form to sign and return to the cooperative letting us know that it is okay to send the check to that address and to notify us of any address change. It is important to keep the cooperative informed of any change of address.
What services do I receive patronage dividends for?
Patronage dividends are based on a percentage of all billed Canby Telcom services.
Are payments of patronage dividends taxable?
If the cost of the service was not taken as a deduction on your tax return when the service was received, the return of the excess paid for the service (patronage dividend payments) is not taxable income. However, most businesses claim telephone service provided to the business as a business expense and therefore would have to claim patronage dividends as income. The cooperative cannot advise its' members on tax issues. You should check with your own tax advisor.
Why does my letter only show certain years when I've had Canby Telcom for over X years?
The other years may be under another member number. You may have multiple member numbers and may receive a check for each member number.