This report compares CO-OP (accrual-based) and MDF (proposal-based) funding models for channel programs. CO-OP allocates funds as a percentage of past sales, offering predictability and ease of use, but can feel like an entitlement and is hard to adjust mid-program. MDF, in contrast, distributes funds based on future potential, allowing flexibility but requiring stricter approvals and posing compliance risks. Legal compliance with the Robinson-Patman and Sarbanes-Oxley acts is critical. A hybrid approach—using CO-OP for marketing expenses and MDF for contra revenue activities—can optimize control, compliance, and strategic alignment.

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