Microsoft MDF in FY27: what changed, and why Microsoft calls it co-op

If you run marketing at a Microsoft partner , this is what changed in Microsoft MDF for FY27. The money you claim is still co-op funds, but Microsoft now directs 50% of co-op investment at activities that build awareness and pipeline.

Microsoft is also giving co-op one set of global guidance on what to spend it on, promising a co-op agent in Partner Center to make claims easier, and adding a new category for distributors. The detail sits in the FY27 co-op guide, which needs a Microsoft sign-in to read.

This guide has been on our site for a while, and FY27 changed enough that I’ve rewritten it. Every Microsoft rule here was checked on Microsoft’s own pages on 20 October 2026. Where I couldn’t confirm something, I say so.

I worked for Microsoft partners before I started Fifty Five and Five. Later we built Microsoft the Partner Benchmarking Tool, which covered more than 10,000 partners and analysed $10m of marketing development funds (case study ).

What are MDF funds?

MDF funds, short for market development funds (or marketing development funds ), are money a technology vendor gives its partners to market the vendor’s products. The partner usually pays first and claims the money back with proof that the activity happened.

Every vendor names and runs it differently. AWS says its Marketing Development Funds “help offset your marketing costs to drive demand generation and build your sales pipeline”, paid as cash or AWS Promotional Credits (AWS ). Cisco runs Co-Sell MDF, “a global incentive” for solutions and services built on Cisco technologies (Cisco ). At Microsoft, the money most partners claim is called co-op.

Is Microsoft MDF the same as co-op funds?

Mostly, yes. I couldn’t find a general MDF programme in Microsoft’s partner documentation. What it describes is co-op: “funds that you earn through Microsoft Incentive Programs by claiming reimbursement for activities that support Microsoft product awareness” (Microsoft Learn ).

Microsoft works out co-op as a share of your incentive earnings. Its example is “60% rebate, 40% co-op”. You get the rebate paid in the usual way, the co-op part builds up for marketing, and your incentive programme guide has the real split for you.

The phrase “market development funds” does still turn up. On the Surface Reseller Alliance page, Gold ADR and Platinum resellers get “Access to Market Development Funds”, which Microsoft says is “At local discretion” (Microsoft Surface ). The same page lists co-op, which it calls co-marketing funds, for Gold ADR and Platinum resellers only, so Authorized and Silver Surface resellers don’t get it. And when we built the Partner Benchmarking Tool, the Microsoft teams we worked with talked about the MDF they gave partners.

Older guides to Microsoft MDF, ours included, described a separate discretionary pot with a 50:50 cost share. I couldn’t find that on Microsoft’s public pages this month, so it isn’t in this version. If a Microsoft contact offers you marketing money outside co-op, get the terms in writing.

ECIF is different again. Microsoft’s sales and marketing teams use it to pay for proofs of concept and deployments for a customer, and it can’t pay for your marketing (Microsoft ECIF explained ).

What changed in Microsoft MDF for FY27?

Microsoft set out the FY27 co-op changes in a partner blog on 30 July 2026 (Microsoft partner blog ) and in Partner Center on 24 August, where it said “Evolved FY27 co-op guidance and resources outline a clearer path to invest in the demand generation activities that drive stronger returns” (Partner Center announcements ). These are the changes it has made public.

1. Half the investment is directed at demand generation. Microsoft says “FY27 also increases the focus on always-on demand generation, with 50% of co-op investment directed toward activities that increase awareness and build pipeline.” Its public pages don’t say whether that’s a rule for each partner’s claims or a target for the programme as a whole.
2. Clearer guidance on what to fund. In Microsoft’s words, “Clearer guidance directs investments toward activities designed to increase awareness, create demand, and build pipeline.”
3. One plan across countries. With “global guidance on spend activities”, Microsoft says you can “build a strategic plan once and activate it across regions”. Handy if you sell in more than one country.
4. Easier claims, on the way. Microsoft says activities are already streamlined, and “upcoming Partner Center views and a co-op agent will simplify the claims experience”. So they weren’t live when Microsoft wrote that in July.
5. A new category for distributors. “For distribution partners, a new to-partner category provides a clearer way to invest in motions that engage and enable partner networks at scale.”

There’s one more I’m watching. In September Microsoft wrote that “For partners that have earned co-op, eligible Partner AI Adoption activities may also provide an opportunity to build AI capability within your own organization” (Microsoft partner blog ). It doesn’t say which costs count, so check the guide before you plan around it.

Microsoft backs the changes with Omdia research. It reports that 43% of partners use less than half of their available vendor-funded marketing allocation, and 46% don’t measure the impact of their vendor-funded marketing investments (Microsoft partner blog ). The second number is the one I’d worry about. When we built the Partner Benchmarking Tool, Microsoft had the same problem from the other side, and couldn’t see what its funds bought. I wrote up how a vendor can see what MDF funds produce , and the same checks work on your own marketing.

How do Microsoft co-op funds work in FY27?

As far as Microsoft’s public pages show, the same way they did before. Co-op runs in halves of Microsoft’s fiscal year: H1 is 1 July to 31 December, and H2 is 1 January to 30 June. You earn for six months, use the money in the next six, and claim it back (Microsoft Learn ). Going by the pattern in Microsoft’s own table, co-op earned between January and June 2026 has to be used by 31 December 2026 and claimed by 15 February 2027, and co-op you earn now gets used between January and June 2027.

Microsoft’s core requirements page groups the activities under demand generation, market development and partner readiness, and each one lists the proof it needs (Microsoft Learn ). A digital advert needs a screenshot of the ad, the landing page URL and a summary of results, such as a click-through report. Agency fees are an eligible expense for most marketing activities. There’s also a “multitouch digital campaign” activity that covers digital advertising, direct email, your website and SEO, and telemarketing in one, as long as each part has its own proof. It also lists a proof of concept activity, where labour from you or a third party in support of the proof of concept is an eligible expense, so co-op isn’t only for marketing.

That page was last updated in July 2024, before the FY27 guidance, and Microsoft’s September blog talks about co-op “across skilling, demand generation, and market development”. So treat the activity list as a starting point and check names and rules in the FY27 guide.

What happens to Microsoft co-op funds you don’t use?

You lose them. Microsoft’s co-op runs in half years. Co-op you earn in one half has to be used in the following six-month usage period, and claimed in a claiming period that opens about six weeks into the usage period and closes about six weeks after it ends. Microsoft’s claims page puts it plainly: “If you don’t use your earnings by the end of the usage period, you forfeit them” (Microsoft Learn ). Small balances work differently. If your co-op earnings in a period are below your programme’s threshold, Microsoft pays them as a rebate at the end of the semester, and you can’t use them as co-op. Microsoft’s threshold page lists USD10,000 for the Cloud Solution Provider programmes and USD1,500 for the other programmes on it, such as Hosting and Surface distribution (Microsoft Learn ), though that page was last updated in July 2024, before FY27. Microsoft also asks you to keep the original proof of every activity for 24 months.

Who can use Partner Marketing Center Pro in FY27?

Partners who have bought at least one partner benefits package or attained a Solutions Partner designation (Microsoft partner blog ), plus software companies on the Premium tier of Frontier Accelerate for Marketplace (Microsoft Learn ). The no-cost tier doesn’t include it, and the Premium tier comes with “immediate access to Partner Marketing Center Pro” (Partner Center announcements ).

Frontier Accelerate for Marketplace is Microsoft’s FY27 offer for software companies, and took in ISV Success on 28 September 2026. Our guide to the Microsoft AI Cloud Partner Program covers what else it brings together.

Microsoft says more than 10,000 partners adopted Partner Marketing Center Pro in its first three months (Microsoft partner blog ). What the platform does, and how to put something of your own inside its campaigns, is in our piece on co-marketing strategy for Microsoft partners .

How should you plan Microsoft co-op for FY27?

Start with your balance and your deadline, then work out who you’re talking to.

1. Check your co-op balance and usage period in Partner Center. Going by Microsoft’s table, co-op earned between January and June 2026 has to be used by 31 December.
2. Read the FY27 co-op guide, signed in. It’s at aka.ms/incentivesguide . Look for the caps and the proof each activity needs.
3. Pick one buyer and one question they’re asking. Something like “IT directors at mid-sized firms working out what Copilot will cost them” is specific enough to build for.
4. Plan one connected campaign. Microsoft’s own advice is to build “connected, multi-touch customer journeys” (Microsoft partner blog ), because one webinar or email on its own rarely carries a buyer that far. Map each part to a co-op activity, so every cost has a home.
5. Keep the proof as you go. Screenshots, landing page URLs, invoices and results, saved when each activity runs, not in a rush at claim time.
6. Measure what it produced. Next half’s plan should come from what worked this half.

Play Co-op Pac-Man

So what changed in Microsoft MDF for FY27?

Microsoft MDF, as most partners meet it, is co-op funds, and FY27 points that money harder at demand generation. Microsoft directs 50% of co-op investment at activities that build awareness and pipeline, gives one set of global spend guidance, promises a co-op agent for claims and adds a to-partner category for distributors. As far as Microsoft’s public pages show, the timings, the forfeit rule and the need for proof haven’t changed.

The rest is in a guide that needs a sign-in, so read it before you plan. If you’d like a hand turning your co-op into a campaign buyers engage with , get in touch.

Frequently asked questions