Capital Credits FAQs

What are Capital Credits?

GVTC is a non-profit entity, and as such, any telephone and broadband internet related revenues in the ILEC service areas, over and above its telephone/internet related operating expenses are earmarked and allocated to each of its member-owners. The allocations are made on a proportional share, based upon the dollar volumes that each individual member spends on telephone/internet services 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' allocation will be.

How do I become a member of the cooperative?

Customers subscribing to telephone and qualifying internet in the ILEC service area will automatically become members.

How are Capital Credits Calculated and Paid?

The amount of capital credits you earn in a given year is based on the amount of capital contributed to the Cooperative through payment of your monthly bill for communications services and the amount of operating margins realized by the Cooperative. Basically, the more communication services you use, the greater your capital credits will be.

Your membership in GVTC automatically activates your capital credits account and you begin accumulating capital credits immediately.

Annually, the GVTC Board of Directors will review the financial status of the cooperative to determine whether a payment can be made to retire a portion of the capital credits previously allotted to its member-owners and if so, how much.

Capital credit checks are issued to customers at the GVTC Annual Meeting for active customers with current accounts. If you do not attend the meeting, your capital credit payment will automatically be applied to your account. Customers with past due balances will have the amounts posted to their accounts. Capital credit checks for inactive customers will be mailed out the first week of July.

How often are capital credits allocated and will I receive a notice?

Capital credits are allocated to you annually after the finances for the previous year have been audited and GVTC's books have been closed. You will receive an "allocation notice" in September of each year stating the capital credits allocated to you for the previous year. The allocation amount presented on the postcard is not the amount the members will receive. The allocation amount is discounted using the Net Present Value Discounting (NPVD) method.

What is the difference between allocated and retired capital credits?

Allocated capital credits represent your pro rata share of the annual margins. Allocated capital credits appear as an entry on the permanent financial records of GVTC and reflect your accumulated capital credits. The GVTC Board of Directors annually reviews the finances of the cooperative and determines whether or not a portion of the previously allocated capital credits can be returned to you. This refund amount is referred to as "retired" capital credits.

Can I receive my capital credit allocation now?

No. Capital credits allocations are simply a record of your pro rata share of the margins. Since the capital is not held in an account and is reinvested to support the operations and growth of the business, the entire balance cannot be retired to you at once. There is no legal obligation imposed on the Cooperative to retire capital credits or to pay out the balances in full. The method, amount and timing of capital credit retirements is at the sole discretion of the Board of Directors.

Can I use the Capital Credits that have been allocated to me to pay my GVTC bill?

No. Capital credits have no cash value until the Board of Directors call for the retirement of previous years allocated capital credits. Your GVTC bill is a current obligation of each member, and is required to be paid in a timely manner each month.

What happens to my capital credits when I leave the Co-Op?

Allocated capital credits remain on the GVTC books in your name and account number until they are retired. Capital credit retirements (payments) are made years after capital credits have been allocated. Please be sure to keep your mailing address current with GVTC.

What is NPVD and what does it represent?

NPVD is an acronym for Net Present Value Differential or Discount.

This is the difference between the total amount of capital credits retired and the amount actually distributed by check at the annual meeting or applied to your GVTC account. It represents the net present value discount amount for the time value of money retired. In other words, this equates a dollar being retired today to the value of a dollar retired in the future, typically 20 to 25 years in the future.

This amount is not held in an account, but is reinvested to support operating activities, growth and capital investment. The discounted amount of the NPVD is tracked and accumulated annually by the Cooperative for each member. This amount will be used, in combination with any current outstanding patronage balance, to determine each member's relative ownership percentage in the Cooperative as of the dissolution date. That percentage will then be used to determine each member's share of the net remaining assets that will be distributed upon dissolution of the Cooperative.

What is required to remove or change a member’s name from the capital credit check?

Each scenario may vary based on the member’s situation.
If a change needs to be made to the membership name, GVTC would require legal documents to support the change. If legal documents are requested, please provide a copy and not the original document. Originals sent in will be returned to you.

Member Name Changes for Deceased Members

  • If a single membership
    •  A copy of the death certificate
    •  A copy of the will, letters testamentary, affidavit of heirship, or other legal document (such as power of attorney, trust document. Etc.) naming heir, trustee, executor or administrator of the estate.
    • Contact information for all parties named
      • Name, number, and mailing address

  • If a joint membership and one member is deceased

    • A copy of the death certificate showing couple was married at the time one expired
  • If a joint membership but divorced before one is deceased
    • A copy of the death certificate
    •  A copy of the will, letters testamentary, affidavit of heirship or other legal document (such as power of attorney, trust document. Etc.) naming heir, trustee, executor or administrator of the estate.
    • Contact information for all parties named
      • Name, number and mailing address

Or

    • If divorce decree states who is entitled to capital credits, we will need a copy.  Decree must specify Capital Credits.
  • If joint membership and both deceased (married)
    • Copy of both death certificates
    • A copy of the will, letters testamentary, affidavit of heirship or other legal document (such as power of attorney, trust document. Etc.) naming heir, trustee, executor or administrator of the estate.  
    • Contact information for all parties named
      • Name, number and mailing address

  • If joint membership and both deceased (divorced)

    • Copy of both death certificates
    • A copy of both wills, letters testamentary, affidavit of heirship or other legal document (such as power of attorney, trust document. Etc.) naming the heir, trustee, executor or administrator of each estate.
    • Contact information for all parties named
      • Name, number and mailing address

Member Name Changes for Living Members

  • Joint members

    • If active service – a name change is required, if one party is keeping service.
    • Need a copy of the divorce decree
      • If decree does not specify capital credits, *equal division forms, signed before a notary by both members are required.

*Capital Credit Equal Division Form is available online.

  • Last name change

    • Copy of marriage certificate, driver’s license, or divorce decree showing name change

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