Guadalupe Valley Telephone Cooperative, Inc. (GVTC) is a non-profit entity, and as such, any revenues over and above its operating expenses are returned to its member-owners in the form of Capital Credits. The refunds are made on a proportional share, based upon the dollar volumes that each individual member spends on telephone services & Internet with the cooperative. The more telephone & Internet services and products the members purchase from their cooperative, the greater the overall profits and the greater the members' Capital Credit refund checks. As a non-profit cooperative, our members collectively own GVTC and have several unique benefits. Capital credits are fundamental to the cooperative business model and are one of the unique benefits to our members. We want our members to have a good understanding of capital credits and our process for allocating and retiring them.
Because GVTC is a non-profit cooperative owned by its members, it doesn't technically earn profits. If revenues exceed expenses during the year, GVTC will earn "margins". Annually, margins are assigned to each member in proportion to the amount of GVTC communications services paid by the member. This pro rata amount of the margin is referred to as the member's "capital credits". This amount is not automatically refunded to each member. GVTC uses margins (i.e. capital credits) to fund the operating activities and minimize borrowing, with the intent of repaying this capital to the member in later years. They strive to operate in a prudent business manner so that the member-owners will continue to have the very best communication service possible at the lowest cost consistent with good financial stewardship and sound management practices.
GVTC allocated capital credits totaling $4.8 million dollars to its member-owners. GVTC's prudent financial decisions have allowed the cooperative to give back over $67 million dollars to its member-owners in the form of capital credit checks, since GVTC began operating.
The GVTC Board of Directors annually reviews the financial status of the cooperative to determine whether a refund is feasible and if so, how much. They strive to operate in a prudent business manner so that the member-owners will continue to have the very best communication service possible at the lowest cost consistent with sound economy and good management.