How to Organize a Cooperative in the Philippines

Organizing a cooperative can both be complex and simple. It requires, first an understanding of the basic needs of the perspectives cooperative members. It demands patience from the co-organizer who must take the cooperative goal and objectives, its visions and long-term goals a real part of the members lives.

However, it can be also easy because the Cooperative Code of the Philippines (RA 6938) has devised very clean cut steps for the coop-organizer and members. This question and answer form should make organizing cooperatives a little more understandable to the cooperative organizer.

What Is A Cooperative?

A cooperative is a duly registered association of persons with a common bond of interest, who have voluntarily joined together to achieve a lawful common social or economic end, making equitable to contribution to the capital required and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principle.

By forming a cooperative, you pool money, human resources and talent to build capital and work together to produce more goods and raise incomes. Through cooperatives, you can look for the other sources of loans at low interest rates of borrowing form informal lenders or users. The cooperative can also be a mechanism for marketing your produce.

What are the Principles of Cooperatives?

The International Cooperative Alliance in Vienna reformulated the cooperative principles in 1966 during its 23 Congress.

The first principle is anchored on voluntarism. This means that each member of a cooperative becomes a member voluntarily and is not restricted by social , political or religious discrimination . In fact anyone who meets the qualifications set by a cooperative's bylaws can be a member if he willingly shoulders their responsibility.

The second principle is democracy. Coops are democratic organizations with officers and managers elected or appointed in a manner agreed on by members. Each member, no matter the amount of his share, is entitled to one vote.

The third principle is the limitation of share capital interest. In the context of cooperatives, interest on a member share capital is limited so that no person- especially those with money- can have an overwhelming equity in the coop. This prevents the domination of the coop's affairs by wealthy members at the expense of poorer members and the organization as whole.

The fourth principle, essentially a manifestation of the third principle, revolves on the sharing all location of cooperatives surplus or savings. At bottom, it mandates distribution of surplus equitably so that no member, gains at the expense of another. Surplus is, by decision of the member, used for developing the coop's business interests, providing common services to members in proportion to their transactions with the cooperatives.

The fifth principle makes provision for the education and training of cooperatives members, officers and employees, and of the general public in the principles and techniques of cooperation.

The sixth principle harps on the promotion of cooperation between cooperatives at local, national and international levels.

The seventh principle is the concern for community by working for its sustainable development through policies approved by the cooperative members.

What Are The Kinds Of Cooperative?

Credit Cooperative- promotes thrift and savings among its members and creates funds in order to grant loans for productivity

Consumer Cooperative- the primary purpose is to procure and distribute commodities to member and non-members;

Producers Cooperative - undertakes joint production whether agricultural or industrial;

Service Cooperative- engages in medical, and dental care, hospitalization, transportation, insurance, housing , labor, electric light and power, communication and other services; and

Multi-Purpose Cooperative - combines two (2) or more of the business activities of these different types of cooperatives;

According to membership and territory, the following are the categories of cooperatives:

In terms of membership:

I .Primary -The members of which are natural persons of legal age;

II .Secondary- The members of which are primaries;

III. Tertiary - The members of which are secondary upward to one or more apex organizations. Cooperatives whose members are cooperatives are called federations or unions.

In terms of territory, cooperatives are categorized according to areas of operation, which may not be coinciding, with the political subdivisions of the country.

What are the General Steps in Forming a Cooperative?

There are six basic steps in setting up a cooperative.

First, get organized. You must have at least 15 members to do that. At once determine the common problems you would want solved and the basic needs you would want provided for through a cooperative. You may want to include increasing of your production, marketing of your produce, credit assistance, power generation, banking or insurance and other similar needs.

Determining your problems and needs will also help you classify the kind of a cooperative you will be organizing.

Even before coop is set up, a dedicated core group of people will do all the organizational and paper works is a must. From this core group, working commodities may be formed to set things moving. These committees may include membership, finance, executives, secretariat to name a few.

Second, prepare a general statement called an economic survey. This statement will help you measure your cooperatives chances of success.

Third, draft the cooperatives by-laws. The by-laws contain the rules and regulation governing the operation of the cooperative.

Fourth, draft the articles of cooperation. Here you indicate the name of the cooperative, its members, terms of existence and other pertinent description about your cooperative.

Fifth, secure bond of your accountable officers, normally the treasurer, or the treasurer and the manager. The amount of the bond is to be decided upon by the Board of Directors, based on the initial network of the cooperatives which includes the paid-up capital, membership fees and other assets of the cooperatives at time of registration.

Sixth, register your cooperative with the Cooperative Development Authority (CDA), you must submit four copies each of the Economic Survey, By- Laws , and Articles of Cooperation and Bond of Accountable Officer(s).

In every step, you may consult the CDA. The CDA emphasizes education as a key to the success of cooperatives.

A P E R S O N A L P O R T F O L I O W E B S I T E

How to Organize a Cooperative
in the Philippines