The Directors of the Davis Food Cooperative, Inc., for the fiscal year begun October 1, 2006, and ended September 29, 2007, have voted to set aside profits attributable to sales to members in accordance with Article V, Section 4(B)(1) of our Bylaws for the purpose of restoring capital and as a reasonable reserve for necessary business purposes.

This is the first time we've not issued checks after four years in a row of patronage refunds to members. Thank you for shopping at the Co-op and identifying your purchases with your Co-op Card. 

The net total of all your purchases was included in our calculation providing you were in good standing for that whole period and used your Co-op Card. If you were inactive (due to lack of investment or bad debts) or weren’t identified at the checkstands, those purchases were not included. 

Please note that any past patronage refund paid to you in the form of share investments belongs to you, not the Co-op; that is, should you withdraw from the Co-op, these shares can be converted to cash. You would not be relieved, in part or in whole, of your obligation to invest $20 in shares by March 31, 2008 — unless it brings you to $300, the maximum dollar amount of shares invested allowed in one membership. You will receive the annual Notice of Share Assessment which will also provide your up-to-date equity investment balance. 

Your patronage makes greater Co-op earnings possible and increases the portion that will be distributed to you. Please continue to let us know how we can meet your needs, and even surprise and delight you! 

If you are a consumer shareholder buying for personal and household consumption your patronage refund is not taxable income for you. Please see the explanation below for details and exceptions. The refund truly is your money — as a cooperative owner — coming back to you. It is like a deferred discount, one that brings the Co-op closer to being not-for-profit in its service to member/owners.

Please consider the option of donating to local groups. One such group promoted and managed by the Co-op is the Davis Cooperative Community Fund. Monies contributed to the Fund increase the capital of the Twin Pines Cooperative Foundation, a tax exempt 501 (c) 3 charitable and educational group. Our dollars to DCCF do double duty by increasing the Foundation’s portfolio while simultaneously increasing annual donations to local groups. If you choose to donate to the DCCF, please endorse your patronage refund check as “payable to DCCF,” sign it, and mail it to:

Thank you again for supporting your Co-op with your patronage, your participation, and your ideas.

Explanation of Bylaw consent provision with respect to Patronage Refunds

A provision of the Davis Food Co-op Bylaws - Article V, Section 4(B) (7) - requires that persons who become or remain shareholders of the Co-op after the adoption of that provision thereby consent to include in their gross incomes for income tax purposes the amounts of any patronage refund paid to them by the Co-op, except to the extent that certain exceptions apply.

The first exception states that inclusion in taxable income is not required where a shareholder's purchases from the Co-op are attributable to "personal, living, or family items." This exception would apply to "consumer shareholders" whose purchases were for personal or household consumption. It would not apply to consumer shareholders whose purchases were for use or resale in a trade or business, or for use in other income-producing activities, nor would it apply to business shareholders.

Thus, the Bylaw consent provision is of no significance to most consumer shareholders of the Co-op, and such shareholders are not required to include the patronage refund in their taxable incomes. Inclusion of the patronage refund in taxable income is required only of business shareholders and of consumer shareholders whose purchases were for business or income-producing purposes.

If you have more questions, please write dwalter[at]davisfood.coop
or call (530) 758-2095, press 8 and then 11 to leave a message for Doug.