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Capital Credits

What are capital credits?

Let's examine capital credits and why they matter to you as a member of the Midstate Communications Cooperative.
First things first, what exactly are capital credits? Think of capital credits as your share of the cooperative's profits. When you become a member of our cooperative, you're not just a customer, you're an owner too!

Every time a cooperative member pays their bill for Telecommunications services of internet, telephone and/or long distance service a portion of that payment (based on their usage) goes towards covering the cooperative's operating expenses. Any excess revenue, after our expenses are covered, is allocated back to the members in the form of capital credits.

Now, you may be wondering, "Why doesn't the cooperative just give me a cash refund?" Well, that's where the cooperative's business model comes into play. Cooperatives are owned and governed by their members, and they operate on a not-for-profit basis. Instead of distributing profits to shareholders like a traditional corporation, cooperatives reinvest those profits back into the cooperative to improve services and infrastructure.

When you receive capital credits, it's a sign that Midstate Communications is financially healthy and that your membership is contributing to its success. Plus, it's a tangible benefit of being part of a cooperative!

Again, you might be wondering, "What happens to my capital credits once they're allocated?" Well, they're typically held by the cooperative for a certain period of time, known as the "allocation period". During this time, Midstate uses your capital credits to invest in infrastructure, maintain reliable services, and fund other important projects. Then, after the allocation period ends, Midstate's board of directors decides when and how to retire or return the capital credits to the members.

In summary, capital credits are your share of Midstate's profits, which are allocated back to you as a member-owner. They demonstrate Midstate's financial health and commitment to the well-being of its members. For further questions please contact our office by phone or text at 605-778-6221, or view the Frequently Asked Question section below.

FAQ's

I just received an allocation statement in the mail. Why did I receive this?

When income exceeds expenses in any given year, margins are allocated to each member's capital credit account according to their usage; this is called capital credit allocation. The statement you received represents your share of the margins for the prior year as well as prior credits you have accrued, if applicable.

Can Midstate issue a check to me for the full amount of my capital credit balance?

Allocated capital credit funds are used for improvements and maintenance to provide quality service to all of our members. Capital credits can only be refunded at the discretion of the board of directors and cannot be refunded upon request from a member.

What happens to capital credits if I move out of the Midstate Communications service area?

Your capital credit allocation balance remains intact until the Board of Directors approves a general retirement. Keep your address current with us, so we can forward statements and payments to you when capital credits are retired in the future. Please call or text us at 605-778-6221 to update your information.

What happens to the capital credits if I am no longer in business and have disconnected my services?

When a business entity ceases to do business entirely, the Board of Directors may elect to retire the balance of the patronage capital on an accelerated basis upon proper documentation. Please contact our office to inquire about the needed documentation and how to apply.

What happens to the capital credits of a deceased member?

In the event a member dies, the capital credits in the member's account become a part of their estate. To assist the member's heirs or beneficiaries in closing the estate, the capital credits are retired after being adjusted for the time value of money. Upon request by the personal representative of the estate, or the heirs of a deceased member where no personal representative has been appointed, the cooperative will provide you with the necessary documentation required to retire the account.

In the event of the death of either partner where joint membership was held, upon notification from the remaining partner, the capital credit balance will be moved into the remaining partner's name and will remain on the normal retirement schedule.

I received a check in the mail, but it's in the name of a former resident. What should I do?

We send checks to the last known address of former members. Do not open the check; please mark "Return to Sender" on the envelope and put it back in the mail or drop it off at one of our office locations in Kimball or Chamberlain.

If two names are on my check, do both people have to endorse the check?

Yes; your bank will most likely require both signatures.

I usually receive a capital credit check but am still waiting for it. When will I receive it?

Capital credits are paid out in arrears. The allocations statement is sent out to members each year and capital credit checks are paid out when the board of directors approves such payments. Please watch our website and follow us on Facebook. We will let you know when the checks are disbursed.

Do I have to claim capital credits as income on my tax returns?

Check with your tax advisor. They are the experts.