Reported figures put as much as $35 billion of co-op and market development funds unclaimed in the US every year, with something close to 60% of MDF going unused.
Sit with the direction of that. The manufacturer budgets the money, the dealer does not claim it, and the unspent portion stays where it started.
I am not alleging that anybody designed the paperwork to achieve that. The point is narrower and harder to argue with: nobody has to intend it. When claiming is tedious and not claiming is free, the money moves one way, and it has been moving that way for decades.
If you sell somebody else’s brand, there is a reasonable chance you are part of that number and do not know by how much.
First find out which kind you have
These get used interchangeably and they are different products requiring different conversations.
Co-op is accrued. You earned it, usually as a percentage of your prior purchase volume, commonly in the 1% to 3% range, and it is typically paid as a cost share where the manufacturer reimburses around half of qualifying spend. This is your money, generated by your sales, sitting in an account with your name on it.
MDF is discretionary. A pot the manufacturer allocates forward, awarded on a proposal for a specific activity. You do not have a balance. You have an application.
That distinction changes your ask completely. With co-op you are asking for money you already earned and the conversation is administrative. With MDF you are competing against other dealers and the conversation is a pitch.
Most dealers I have spoken to about this cannot say with confidence which they have, or what their current balance is. That is the first thing to go and find out, and it takes one email.
Why it goes unclaimed, specifically
Not laziness. The reporting on this consistently identifies administrative bottlenecks, and underneath that sits one particular problem worth naming.
Mismatched eligibility. The manufacturer’s list of approved activities and your actual marketing do not overlap. The things you could run are disallowed, and the things that are funded you do not run.
That is the mechanism behind most unclaimed balances. It is not that the dealer cannot be bothered, it is that the dealer’s best channel is not on the list, and getting it added feels like a bigger job than forgoing the money.
The distortion, which is the actual argument
Here is what I would push on, and it costs more than the unclaimed money does.
The easiest activity to claim for is rarely your highest return channel.
Print, radio, direct mail and co-branded collateral claim cleanly, because the rules were written when those were the channels and the proof of performance is a tear sheet. Search, local service ads, review generation and anything where the deliverable is a dashboard rather than an artifact are harder to document, harder to pre-approve, and in some programs still partly disallowed.
So a dealer who follows the money ends up running the campaign the paperwork likes. The fund has quietly reallocated the marketing plan, and because half of it is reimbursed, the bad channel looks cheap.
A 50% subsidy on your third best channel is worse than paying full price for your best one, and almost nobody does that arithmetic.
This is the same governance shape as the franchise ad fund, where a pot of money sitting between two parties ends up serving neither’s priorities. Different mechanism, identical outcome.
The two deadlines, and the one that catches people
Every program has a date by which the money must be spent, commonly the end of the program year, after which unused accrual typically expires and goes back.
It also has a separate and earlier deadline for submitting the claim, usually 60 to 90 days after the claim period, and frequently a rule that the claim must arrive within a set number of days of the supplier’s invoice.
That second set is what actually loses money. A dealer who spends in good time and submits in February has often missed a window that closed in December. Go and find both dates in your own program document, today, because we are in the quarter where this matters.
While you are there, the other trap is pre-approval. Many programs require creative to be approved before it runs, with specific requirements on logo placement and sizing, legal disclaimers, fonts and colors, and sometimes a minimum level of brand exposure. A campaign that ran beautifully and was never pre-approved is frequently unclaimable afterwards, and that is a conversation nobody enjoys having internally.
Negotiate the rules rather than the amount
This is the part dealers skip, and it is where the leverage actually is.
Everybody asks for a bigger allocation. Almost nobody asks for the eligible activity list to change, and the list is worth more than the number.
Four things I would raise, in this order.
Get your best channel added to the eligible list. Bring the numbers. Cost per lead, cost per sale, and a comparison against the funded alternative. A channel manager presented with evidence that the funded activity performs worse has a reason to act.
Ask what counts as proof of performance for a digital channel. Get the answer in writing before you spend. Screenshots, platform reports, invoices, whatever it is, and whether an agency invoice qualifies or only media cost does.
Ask whether management fees are claimable. Often they are not, which quietly changes the real subsidy rate on anything you do not run in house.
Ask about pre-approval turnaround. A two week approval cycle is incompatible with running responsive search campaigns, and saying so is a legitimate and solvable objection rather than a complaint.
The leverage you have is better than you think. Unclaimed funds are not a good outcome for the channel manager either. Their program exists to generate sell-through, and a dealer who turns up with a plan and evidence is doing part of their job for them.
The honest caveat
Co-op money is not free money and should not drive the plan.
A subsidised activity that does not work is still a waste, just a cheaper one, and the dealers who get into trouble here are the ones who build their entire marketing around what claims easily. The fund should pay for part of a plan you would have run anyway, which means deciding the plan first and then finding out what of it is claimable.
Reversing that order is how a business ends up with a brand-compliant radio spot and no idea where its leads come from.
Where I come out
Send two emails this week. One asking for your current accrual balance and the current year’s program document. One asking what proof of performance is required for digital channels.
Then diary both deadlines, the spend one and the claim one, in somebody’s calendar by name.
And the next time you are in a conversation with the manufacturer, spend it on the eligible activity list rather than on the number. The number is a negotiation you will mostly lose. The list is one you can often win, and it is worth more.
My notes on what I work on cover the rest. If you’d like to think through your own program, drop me a line on email, WhatsApp or LinkedIn and we can have a quick chat. I’m contracted full time so this isn’t a pitch.