Study Examines Strategies With Patronage Refunds

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MADISON, Wis. – Unique to cooperatives and especially to credit unions, a new study examining so-called “Patronage Refunds” has been released by the Filene Research Institute.

The study, “Credit Union and Cooperative Patronage Refunds,” probes how credit unions can use them to manage capital levels, return value to member-shareholders, and tie members more closely to the CU.

Using cooperative theory, the authors, Joel Dahlgren and Dan Kitzberger, argue credit unions should go beyond traditional interest rate thinking to consider patronage dividends as a long-term commitment to the most loyal users. The difference between a cooperative (such as a credit union) and an investor-owned firm shines through in how well the cooperative rewards members who contribute the most to its ongoing success, Filene said in a statement.

Included in the 64-page report are case studies that show how CoVantage Credit Union, Dow Chemical Employees’ Credit Union, and Wright-Patt Credit Union calculate their patronage refunds and why they see value in offering them; an in-depth examination of how patronage refunds affect tax liability at non-credit union cooperatives, and discussion of how patronage dividends drive a member-centric conversation about capital management.


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