What are co-op funds?
Co-op funds (cooperative marketing funds) are marketing dollars a vendor accrues to a partner, usually as a percentage of the partner's sales, that reimburse the partner for approved, vendor-branded marketing activities.
What it means
Co-op funds are an earned, accrual-based marketing benefit. As a partner sells, it accumulates a co-op balance, often a fixed percentage of purchases, that it can claim back by running qualifying marketing, ads, events, content, campaigns, and submitting proof of performance. Because the funds are tied to sales, co-op rewards productive partners and encourages them to reinvest in demand generation for the vendor's products.
Why it matters
Co-op funds extend a vendor's marketing reach through partners who understand their local markets, multiplying demand generation without the vendor executing every campaign. They also deepen partner commitment: a partner with an accrued balance is motivated to market the vendor's products to claim it. Well-run co-op programs improve local visibility, generate partner-sourced pipeline, and strengthen the vendor's brand presence in markets it couldn't cover directly.
How it works
The vendor sets an accrual rate and a list of approved activities and reimbursement rules. Partners run campaigns, submit claims with proof of performance, and get reimbursed from their accrued balance. Example: a vendor accrues 2 percent of a reseller's purchases into co-op; the reseller spends $5,000 on a regional webinar and paid ads, submits receipts and results, and is reimbursed up to its available balance, all managed through the vendor's partner portal.
Related terms
Related terms include MDF (market development funds), rebate, through-channel marketing, partner marketing, and channel program. Co-op differs from MDF in that co-op is accrual-based (earned from sales) while MDF is typically discretionary funding allocated upfront for strategic activities. Both are managed through PRM and through-channel marketing tools.
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Frequently asked questions
What is the difference between co-op funds and MDF?
Co-op funds are accrued automatically as a percentage of a partner's sales and reimburse past-performance marketing. MDF (market development funds) is discretionary money a vendor allocates upfront, often to strategic partners, for specific proactive campaigns. Co-op is earned; MDF is granted.
How do partners claim co-op funds?
Partners run an approved marketing activity, then submit a claim with proof of performance, receipts, ad screenshots, event details, through the vendor's portal. Once verified, the vendor reimburses the eligible amount up to the partner's accrued co-op balance.