What is patronage and how is it distributed?

What is patronage?

Patronage is the distribution of all or a portion of Co-op surplus profits to its members. The patronage dividend, also known as a patronage refund or return, is a form of profit sharing. 

In the event of a surplus, Stocksy United's Board of Directors may determine to payout some (or all) of Stocksy’s surplus in the form of patronage dividends/returns to our eligible members.

How is patronage distributed?

Stocksy United’s Rules govern how the Co-op distributes patronage to our three membership classes. Below is the payment breakdown:

• Class A receives 5% of the return, allocated to each Class A member equally
• Class B receives 5% of the return, allocated to each Class B member in proportion to their time with the Co-op (years of service)
• Class C receives 90% of the return, allocated to eligible Class C members based on the percentage of total royalties that member earned in the fiscal year

Stocksy United has paid patronage for fiscal years 2015, 2016, 2017, 2019, and 2020 — totaling $1.6 million. You can see our 2020 patronage announcement here. 

From Stocksy's Co-op Rules

8.   FINANCE

8.4 Use of surplus funds

The board must apply surplus funds arising from the operation of Stocksy in a financial year as follows:

1. First, to the reserves required by the Act;

2. Next, to fund additional reserves the board considers necessary or prudent for the operations of Stocksy;

3. Next, to retire all or a portion of any deficit previously incurred by Stocksy, as the board determines appropriate;

4. Next, the board may donate part of the surplus for charitable or educational purposes; and

5. Last, to patronage returns in an amount set by the board.

8.5 Reserves

1. The board may set aside as reserves for meeting contingencies an amount determined appropriate by the board from time to time from the surplus funds arising from the operations of Stocksy in each financial year.

2. Subject to the Act and these Rules, reserves must be available to meet contingencies.

8.6 Patronage returns

1. Stocksy must not pay any patronage returns if there are reasonable grounds for believing that:

   1. Stocksy is unable to pay its liabilities as they become due in the ordinary course of business; or

   2. If paying the patronage returns would render Stocksy unable to pay its liabilities as they become due or cause the realizable value of Stocksy’s assets to be less than its liabilities.

2. The directors must report to each annual general meeting the state of Stocksy's financial affairs and the amounts, if any, they have set to be paid by way of patronage returns, and the patronage returns paid must not exceed the amount set by the directors;

3. Subject to rule 8, Stocksy may declare patronage returns in accordance with the Act and as follows:

   1. Class A will receive 5% of the patronage return amount set by the directors which will be allocated to each member of Class A equally

   2. Class B will receive 5% of the patronage return amount set by the directors which will be allocated to each member of Class B in proportion to their years of service (as indicated by number of shares held)

   3. Class C will receive 90% of the patronage return amount set by the directors which will be allocated to each member of Class C based on the following formula:

4. All patronage returns will be subject to any applicable withholding taxes