You may be wondering exactly what membership in Frontier Natural Products Co-op means. In a nutshell, you provide — through your regular purchases from Frontier — the capital necessary for the business to operate, and, as an owner, you share in the profits of the business. You also have an equal vote with other members in the election of Frontier's Board of Directors and any issues that come before the membership.
A cooperative is a business owned and democratically controlled by the people who use its services. These members receive benefits of ownership based on their use of the cooperative.
Cooperative businesses are the economic application of the concept of cooperation — two or more people joining forces to accomplish something. Co-ops bring people together to own and control economic enterprises and to meet their mutual needs. There are food co-ops, housing co-ops, and daycare co-ops, for example. In Frontier's case, that need is a supply of natural products, such as spices and seasonings, herbs, and essential oils. Frontier purchases these products from around the world, processes and packages them, inventories them and fills its members orders for the products.
These member-owned, member-controlled businesses operate for the mutual benefit of all members according to common principles that include open and voluntary membership; member economic participation; education, training and information; and concern for the community. These seven cooperative principles are set out in the International Cooperative Alliance's Statement on the Cooperative Identity.
The "member economic participation" at the core of a cooperative is that the members using the co-op provide the capital for its growth.
This is done at Frontier by setting aside share money to be used by the cooperative. When you become a member of Frontier, you pay a small membership fee, and a share account is opened in your name. Then additional share money is put into your account from Frontier’s profits until your account balance is 2.25 times the amount of your average monthly purchase. (The money is taken out of your portion of Frontier’s profits at the end of the year as explained in the next section.)
During the time you are a member, this share money is used by Frontier for capital purchases, such as buildings and equipment. Because we have tens of thousands of members throughout North America, the small amounts of share money from individual members, taken together, create a strong and stable financial base.
Members Share Profits
Of course, the owners of a business are entitled to the net income (profits) of the company. The only owners of Frontier are the members, so they divide the net income at the end of each year. Each member is given a part of the year’s net income that is in direct proportion to the amount they purchased that year from Frontier. This is called a patronage refund. Throughout its history, Frontier has returned almost $30 million in patronage refunds. Some of this money is paid out immediately as cash, and some is retained in member accounts. The retained portion (called deferred patronage) is first used to build your share balance to the appropriate level, with amounts beyond that being returned to you at a later date.
You retain ownership of your membership fee, and all of your share money and deferred patronage. If you should decide to terminate your membership for any reason, all of the money you have accumulated will be returned to you — your initial membership fee and share money in increments of $1000 per month and your retained patronage on the regular Board-approved schedule.
The Bottom Line on Membership
The purpose of Frontier is to fill our members' needs. Our members, not outside investors, own the business and define its direction. Not only do members provide the capital for the business, they also elect a Board of Directors to approve the way the money is spent and define the future direction of the company. We respect our members as Frontier's owners and try not only to provide them with the best products and service available, but also to do business in accordance with their values — with integrity, environmental and social responsibility, and a commitment to the health and well being of the people who use our products.
If you have specific questions about the details of Frontier's membership or patronage, they may be answered in our Frequently Asked Membership Questions. If you don't find the answer there, give us a call, toll-free, at 800-669-3275, and we'll get the answer for you.
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