What are Capital Credits?

Your Missouri Electric Cooperative’s first job is to provide you with reliable, safe, affordable electricity. As a nonprofit organization, though, we do more for you than just power your home, farm, or business affordably and reliably. When we’re able to do so, we put cash back into your pocket, too.

Your local Cooperative is owned and governed by you, its Member-Owners, so when there’s margin at the end of the year after bills have been paid and investments have been made, you earn part of that margin. We call your earnings your capital credits.

Source: National Rural Utilities Cooperative Finance Corporation

Capital credits are just one way that your nonprofit Missouri Electric Cooperative is different from a traditional for-profit utility company. Keep reading to learn more about what capital credits are and how they’re distributed.

What are Capital Credits?

At the end of each year, your Cooperative will determine how much margin is left in its budget after operating expenses have been covered, loans have been paid, and appropriate emergency funds have been set aside.

“A margin is any money left over after all operating costs have been paid,” explains Central Missouri Electric Cooperative. “As a cooperative member-owner, part of that margin belongs to you. The more electricity you’ve used, the greater your share of the margin (source).”

It’s up to your Cooperative’s by-laws and board of directors to decide exactly how that margin will be spent, but in general, your capital credits come out of those margins. And the more power you’ve purchased from your Cooperative, the more capital credits you’ll earn. 

Where Does the Money for Capital Credits Come From? 

The money for your Cooperative’s capital credits program comes from the money you pay into the Cooperative as part of your monthly electric bill. Every Member-Owner of every Missouri Electric Cooperative earns capital credits, but not every Cooperative — and not every Member-Owner — will receive a check every year.

When will I receive my capital credit?

Your Cooperative’s board of directors will decide when to issue capital credit checks and when to hold onto that money for as capital for the Cooperative. Your Cooperative will allocate your credits every year, but it may only issue you a check (or “retire” your capital credits) every few years.

It’s important to note that many Cooperatives will only retire your capital credits if those credits meet a minimum threshold. That threshold is typically between $5 and $15 per Member-Owner, and it’s designed to prevent your Cooperative from spending more money writing and issuing your check than your capital credits are worth. 

 Can I donate my capital credits back to the cooperative? 

Most of Missouri’s Cooperative Member-Owners have a household income that’s under $75,000 per year, and according to the Associated Electric 2013 Triennial Survey, 20 percent of our Member-Owners’ annual household incomes are less than $20,000.


Image Credit: Co-Mo Electric Cooperative


Operation Round Up is a charitable program that many of Missouri’s Electric Cooperatives participate in. Through Operation Round Up, you can donate your capital credits back to your Cooperative. Your Cooperative uses your donation to provide financial assistance to community organizations, individuals in crisis, and to fund Cooperative scholarships. If you’re interested in donating your capital credits this year, contact your local Cooperative.  

Your Missouri Electric Cooperatives: More than Just Electricity 

Your Missouri Electric Cooperative’s first job is to provide you with safe, affordable, and reliable electricity, but we take our commitment to community even further through programs like capital credits and Operation Round Up.

As a nonprofit organization, your Cooperative is required by law to use 85% or more of its annual income for the sole purpose of meeting losses and expenses. You can read more about your Cooperative’s nonprofit status on the National Rural Electric Cooperatives Association website, and you can learn more about Missouri’s Electric Cooperatives by following us on Facebook ,
Twitter, YouTube, and Instagram.



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