Patronage and Capital Credits

Because CTC is a cooperative, owned by its members, it doesn’t technically earn profits. Instead, if revenues exceed the cost of doing business (expenses), the Co-op earns margins (profits). Each year, margins earned are assigned to members in proportion to the amount each paid for telecommunication services that year. These assigned margins are called patronage capital credits.

All members who have service with CTC during a year the Co-op earns margins are assigned patronage capital credits.

CTC retains patronage capital credits for a period of time to help fund capital projects like new services for subscribers, service to new areas and plant upgrades. This keeps costs down by allowing us to minimize our borrowing and decreases our debt load. This is exactly what patronage capital credits are intended to do – help keep your Co-op financially healthy.

These funds are distributed when management and the CTC board of directors believes it is a prudent thing to do based on the Cooperative’s financial well-being and need for capital to reinvest in infrastructure.

In 2008 patronage capital credits in the amount of $267,472.72 were distributed for the year 1986, bringing the total to $2,090,988.87 of credits distributed to our member-owners since the Cooperative’s incorporation in 1978.

Capital credits are refunded early in situations of deceased members. An additional $30,240.84 has been distributed to the estates of deceased patrons. Unclaimed capital credits are used to fund scholarships for graduating Seniors at CHS and to date over $50,000 has been awarded to these outstanding students!

Distributions are decided by the Board of Directors. Their decision may be based on the communications they receive from members, the company’s need for capital on a forward-looking basis and the overall financial health of the Cooperative.

Though philosophies may vary from board to board, the CTC Board of Directors anticipates issuing checks whenever the Cordova Telecom Cooperative’s financial viability warrants. One of our cooperative goals is to make patronage capital payments periodically.