A marketing fund is a liability. Its balance should come from a ledger.
The person searching for this owns channel-marketing finance at a manufacturer — and holds a fund balance the partners don’t agree with. Co-op and MDF programs fail quietly: the accrual is computed in one spreadsheet, claims are approved in email, expirations live in the agreement PDF. Aurgus is the governed accrual and balance layer for co-op and MDF funds: the fund earned from transaction data deterministically, every accrual an event on an append-only log, every settlement human-approved, the balance derived rather than maintained. We do not ship proof-of-performance workflow today — that boundary is stated on this page, not discovered in the demo. Aurgus is in design-partner stage.
How a co-op or MDF fund actually works.
Co-op funds are earned — a percentage of qualifying purchases. MDF is typically allocated — discretionary money against a plan. Hybrids are everywhere. Either way, the lifecycle has four stages, and each one is a number someone has to defend.
- 1
The fund earns or is allocated.
Accrual-based co-op: each qualifying purchase adds a percentage — 2% of qualifying purchases is a common shape — scoped by product line, region, or partner tier. Discretionary MDF: an amount is committed per partner or initiative. The earning formula and its scope are contract terms, and every downstream number inherits them.
- 2
The partner performs marketing activity.
Campaigns, events, listings, demo units. The agreement defines what qualifies and what evidence is owed — the proof-of-performance terms that will decide claims later.
- 3
The partner claims against the balance.
Invoices and activity evidence, submitted against what the partner believes it has earned. This is the moment two views of the same fund meet — and where they usually turn out to differ.
- 4
You validate, settle, and expire.
Approved claims draw the balance down; denied claims need a defensible reason; and unclaimed funds expire per the terms — use-it-or-lose-it windows that somebody has to actually enforce. The balance at any moment is accrued, minus settled, minus expired — three computed quantities, not one remembered one.
Where co-op and MDF programs fall apart in practice.
The dollars are large — trade and channel-marketing spend is routinely one of the biggest discretionary lines in the channel P&L — and the controls are usually the weakest. The Off-Invoice Control Index scores this dimension in about three minutes.
- The accrual, the claims, and the expirations live in three different places. The accrual is computed quarterly from a sales extract; claims are approved in email or a portal; the expiry rules live in the agreement PDF. Nobody nets all three continuously, so nobody actually knows the balance.
- The partner’s balance and your balance disagree. The partner counts purchases you scoped out, or an accrual rate that was amended mid-year. The gap surfaces as a disputed claim denial — the worst possible venue to reconstruct a year of arithmetic.
- Expirations are enforced never or retroactively. Use-it-or-lose-it windows pass unnoticed, then get enforced in a batch, and the partner relationship takes the hit for what is really a bookkeeping failure.
- The accrued-but-unclaimed liability is a guess. At close, someone is asked what the company owes across every partner fund. If the answer is assembled from spreadsheets, it is an estimate wearing a liability’s clothes — and the auditor will treat it accordingly.
- Revenue-reduction vs marketing-expense classification is applied inconsistently. The ASC 606 treatment depends on whether the partner delivers a distinct service at fair value. When program terms are vague and evidence is thin, the classification wobbles between periods — and restatements start exactly there.
What Aurgus does for co-op and MDF today — and what it deliberately doesn’t.
MDF and cooperative marketing are two of Aurgus’s v1 program patterns, on the same substrate as our rebate management software. The honest boundary is below.
- 1
The earning formula as a governed agreement.
Rate, scope, eligible products and partners, validity window — authored in plain language, structured for review, and activated only when a named human approves. Amendments version the agreement; they don’t overwrite it.
- 2
Accruals computed deterministically from transaction data.
Each qualifying transaction’s contribution to the fund is calculated by the engine — same data, same agreement, same answer every run — and posted as an immutable event with lineage to the source rows and the clause that produced it.
- 3
The fund position derived from the event log.
Accrued, settled, and remaining are queries into the ledger, not cells in a workbook. When the partner disputes the balance, the answer is the event history — every accrual, every settlement, each carrying its why. The same lineage bar as the rebate audit trail.
- 4
Human-approved settlements.
A claim decision becomes a settlement event only when a named human approves it, and the approval is part of the record. Claims and supporting data arrive as workbook or CSV today.
- 5
An accrual figure your close can stand on.
Because the accrued-but-unclaimed liability is computed from events, the number you carry at close ties to transactions — which is what the ASC 606 conversation with your auditor actually needs, whichever classification your program's substance dictates.
Your fund balances are maintained by hand.
If accrued-minus-claimed-minus-expired is a spreadsheet formula someone updates, the balance is only as good as the last update — and the partner’s copy is diverging right now. Deriving the balance from a ledger is precisely what Aurgus ships.
Your close estimate for unclaimed funds is a plug.
An accrued-but-unclaimed liability computed from transaction-level events, with lineage, is the difference between an estimate and a defensible number.
You need proof-of-performance workflow.
Creative-asset upload, activity review and scoring, claim-documentation checks — the marketing-operations layer — is deliberately not built. Claims arrive as workbook or CSV with an operator decision. Get the fund arithmetic trustworthy first; workflow the evidence second.
You need a partner portal for fund visibility.
A partner-facing view of balances and claims is not shipped. Today the manufacturer’s team holds the governed balance and shares it; the partner logging in to self-serve is roadmap, not product. Aurgus is in design-partner stage, which we state plainly.
Co-op and MDF, honestly answered.
- What is the difference between co-op and MDF?Both fund partner marketing with the manufacturer’s money; the difference is how the fund is earned. Co-op (cooperative advertising) accrues as a percentage of the partner’s qualifying purchases — the partner earns marketing money by buying. MDF (market development funds) is typically discretionary: allocated ahead of activity, per partner or initiative, against a plan. Hybrids are common. The reconciliation problems are nearly identical for both: how much has been earned or allocated, how much claimed, and what remains.
- How does an MDF or co-op fund accrual work?For accrual-based co-op, each qualifying sale or purchase adds a percentage to the partner’s fund. The balance at any moment is everything accrued, minus everything settled against approved claims, minus anything expired — three computed quantities. When any of the three lives in a spreadsheet, your balance and the partner’s belief about it drift apart.
- How are co-op and MDF funds treated under ASC 606?The core question is whether the payment is consideration payable to a customer — reducing revenue, like a rebate — or payment for a distinct service at fair value, which is marketing expense. That depends on the program’s substance: what the partner actually delivers and whether you can evidence fair value. It is a judgment your controller and auditor own. What the platform must contribute is the number underneath the judgment: an accrual and balance computed from transaction data with lineage — see our ASC 606 rebate compliance page for how that chain is built.
- Why do fund balances stop reconciling?Because the three moving parts live in three places: the accrual in a quarterly spreadsheet, claims in email or a portal, expirations in the agreement PDF. The partner nets them one way, you net them another, and the gap surfaces as a disputed denial or an audit question. The fix is structural — all three components computed on one ledger from the same governed agreement.
- Can Aurgus manage MDF and co-op funds?The accrual and balance layer, yes — MDF and cooperative marketing are two of Aurgus’s v1 program patterns. Accruals computed deterministically with lineage, settlements human-approved, the fund position derived from the event log. What we deliberately don’t ship today: proof-of-performance workflow (asset upload, activity review, claim-documentation checks) and a partner-facing portal. Claims arrive as workbook or CSV. To pressure-test your program, talk to one of our experts.
The adjacent mechanisms you’re probably also running.
Bring one partner’s fund history and both balances.
Thirty minutes. No pitch. Walk through one fund — your balance, the partner’s balance, and the claims between them — and we’ll tell you honestly whether Aurgus fits, including where it doesn’t yet.