The Limited Cooperative association structure would allow you the flexibility to accept outside investor equity. The outside equity may afford your cooperative the advantage of timely opportunities or to balance your debt and equity capital structure. We are not encouraging this structure for all of our cooperatives, but we have seen enough through the last 48 years to know that it is worth considering; particularly as our cooperative clients continue to grow. We are not attorneys, so we would have to direct you to the legal resources to address the details. Contact your Gardiner Thomsen partner or manager if you would like to start the discussion.

One of the best parts of working with our cooperative clients is helping them with the annual decision of how much of their earnings to allocate back to members as patronage dividends. There are rules to follow in order to protect the ability to deduct the allocation for income tax purposes. Many items come into play, such as: is the cooperative "exempt" or "non-exempt" for tax purposes, will patronage dividends be in the form of "qualified" or "non-qualified" allocations, and is the allocation based on "book" income or "tax" income.

On June 16, 2011, the FASB issued ASU 2011-05, eliminating one of the three existing presentation options for other comprehensive income and requiring reclassification adjustments to be reported on the face of the financial statements rather than in the notes as currently permitted. For non-public entities, this amendment is effective for fiscal years ending after December 15, 2012 and is to be applied retrospectively. If no items of other comprehensive income are present in any of the years presented in the financial statements, this standard does not apply.

Over the past few years I have heard many different opinions in regard to patronage allocations, ranging the gamut from: "The members don't want to accept patronage allocations," to "Cooperatives must allocate patronage earnings." More specifically, I have hear that members want earnings reinvested for bigger and better facilities, more efficient equipment and the most recent technologies rather than receiving patronage earnings from their local cooperative. Before deciding to dole out patronage allocations or reinvest those earnings, cooperatives must consider the tangible and intangible values that each option holds.