Capital Credits FAQs

What are Capital Credits?

GVTC is a non-profit entity, and as such, any telephone related revenues over and above its telephone 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 services with the cooperative. The more telephone services and products the members purchase from their cooperative, the greater the overall profits and the greater the members' allocation will be.

Each year, the GVTC Board of Directors 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. 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.


How do I become a member of the cooperative?

You automatically become a member by subscribing to communication services offered by GVTC. Only members are eligible for capital credits.

How are capital credits calculated?

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.

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.

What do I have to do to start accumulating capital credits?

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

Do I have to be a member for an entire year to earn capital credits?

No. Capital credits are calculated based on the amount you are billed for communication services as described above. If you are billed for service for even one month, you will accumulate some capital credits if GVTC earned margins (i.e., revenues in excess of costs) during the year.

What's 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 Capital 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. Because capital credits have no cash value until the Board of Directors calls for the retirement of previous years allocated capital credits, they can't be used to pay your current bill. Your GVTC bill is a current obligation of each member, and is required to be paid in a timely manner each month. Capital credits are retired at the discretion of the Board of Directors of GVTC over several years.

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

Your allocated capital credits remain on the GVTC books in your name and account number until they are retired. Because capital credit retirements (payments) are made years after capital credits have been allocated, you should be sure that we always have your current mailing address. We may retire capital credits outside the normal schedule for retirements when we receive proper notification that a member or former member is deceased.

When and how will my capital credits be retired?

Annually, the GVTC Board of Directors will review the finances of the cooperative and determine whether or not a portion of the previously allocated capital credits can be returned to you. Capital credits will be returned to you via a credit on your bill, or you may attend the GVTC Annual Meeting in June of each year to pick up a check. Inactive members, i.e. those no longer receiving communications service from GVTC, will receive a check.

What is NPVD on the allocation notice?

This stands for "Net Present Value Differential".

What does the NPVD amount represent?

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 retire in the future, typically 20 to 25 years in the future.

Is this amount held in a separate account?

This amount is not held in an account, but is reinvested to support operating activities, growth and capital investment. However, the amount of the NPVD is tracked and accumulated annually by the Cooperative for each member.

When will I receive this amount?

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 members name from the capital credit check?

If a change needs to be made to the membership name, GVTC would require legal documents to support the change. Please contact our office for details. In general:

  • If a death, GVTC would need a copy of the death certificate. If both members are deceased, GVTC would need a copy of both death certificates and a copy of the will or letters testamentary of last deceased.
  • If divorced, GVTC would need to obtain capital credit division forms from both parties.

What do I need to do to settle the estate of a deceased member?

When settling an account, additional discounting to the capital credit balance will occur. If you wish to settle an account a "Full Distribution" form must be completed to fulfill the request.

Contact our Capital Credits department at 1-800-367-4882
or submit an email by clicking here.