How To Organize A Cooperative
Organizing a cooperative can both be complex and simple. It requires. first
of all 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
But 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 Cooperativism?
The cooperative principles were reformulated by the International Cooperative
Alliance in Vienna 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 cooperativism, 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 are, 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
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:
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In terns 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 member of which are secondaries 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 coincide with the political subdivisions of the
What are the General Steps in Forming a Cooperative?
Basically, there five 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.
Who May Become Members of a Primary Cooperative?
If you are a Filipino of legal age, you can be a coop member if you meet the
qualifications prescribed by the coop's by laws.
The board of directors act on application for membership.
A member may exercise his rights only after having paid the fees for membership and
acquired shares in the cooperative,
What are the Kinds of Membership in the Cooperative?
A cooperative has two kinds of members; regular members and associate members.
A regular member is entitled to all the rights and privileged of membership as
stated in the Cooperative Code and the coops by- laws.
An associate member has no right to vote and to be voted upon and is entitled
to such rights and privileged provided by the cooperatives by laws.
What is the Minimum Number of Members in a Cooperative?
Fifteen (15) natural persons of legal age who are citizens of the Philippines.
Can Government Officers and Employees Join a Cooperative?
Yes, provided that:
Any officer of the government of the CDA shall be disqualified to be elected
or appointed to any position in a cooperative;
Elected officials of the government, except barangay officials, shall be
ineligible to become officers and directors of cooperatives; and
employee may, in the discharge of his duties as member in the cooperative, use
official time provided that the operations of the office where he works are
not adversely affected.
What is an Economic Survey?
An economic survey is a general statement describing the structure, purpose,
economic feasibility of the proposed cooperative, area of operation, size of
membership and other pertinent data. It, in fact a project feasibility study.
The structure describes the kind of cooperative being set, up whether it is
primary, secondary or tertiary and whether it is a credit, consumer transport
or any other type of coop.
The purpose defines the primary, secondary and
other objectives of the cooperative. The area of operation merely indicates
the general merely indicates the geographical or sectoral of the coop. For
example, a cooperative may operate in, say Caloocan City; or it may operate in
a certain sector like farmers. Size of membership is important so as to set limits to
the coop's scope of operation. This is closely related to cooperative
The most important part of the survey is the economic feasibility. Here, the prospective coop members estimate the income and expenses of the
cooperative. It makes a projection of the possible growth pattern of the
cooperative certain period, probably three (3 ) years, and how this growth
generates income and incurs expenses. It tries to anticipate obstacles and
constraints and make allowance for them.
What Are Cooperative By-Laws?
By- laws should are the set of rules that determines how a cooperatives is to
be run without confusion.
In general, by-laws should be consistent with the
provisions of the Cooperative Code of the Philippines (RA 6938). The by-laws
The qualifications for membership; how they are acquired, maintained
The rights and obligations of members;
The condition for transfer of
a share of interest;
The rules and procedures covering agenda, time, place,
and manner of calling, covering , conduct meeting, quorum requirements, voting
system, and other, matters related to the business affairs of the general
assembly, board of directors, and committees;
The general conduct of the
affairs of the cooperative , including the powers and duties of the general
assembly, board of directors, committees and the officers, and their
qualifications and disqualifications;
The manner in which capital may be raise
and purpose for which it can be utilized;
The mode of custody and investment
of net surplus;
The accounting and auditing systems.
The manner and limitations of loaning and barrowing, including
The methods of distribution of net surplus;
The manner of
adopting, amending, repealing, and abrogating by-laws;
A conciliation or mediation mechanism for the amicable settlement of
disputes among members, directors, officers and committees; and
Other matter pertaining to
the purpose and activities of the cooperative.
What does The Article of Cooperation contain?
The Article of Cooperation is a duly notarized document that legally binds all
the signatories in the formation of a cooperative.
It should contain:
The name of the cooperative which shall include the word " cooperative, " e.g.
Sta. Maria Multi-Purpose Cooperative;
The purpose of the cooperative and
scope of business;
The term of existence of the cooperative (not more than 50
The area of operation and the postal address of the registrants;
common bond of membership;
The list of names of the directors who shall manage
the cooperative; and
The amount of its share capital, the names, and
residences of its contributors and a statement of whether the cooperative is
primary, secondary of tertiary in accordance with Article 23 of R.A 6938.
Where Do You Register a Cooperative?
The Cooperative Development Authority is the only government agency
empowered to register all types of cooperatives.
Its main office at 5th and
6th floors BEN-LOR Building, 1184 Quezon Avenue, Quezon City. To facilitate
the flow of its services, extension offices have been set-up. These are
located in (1) Dagupan City; (2) Tuguegarao, Cagayan; (3) Baguio City; (4) Sto.
Tomas Pampanga; ( 5) Manila Extension Office (MEO), Quezon Avenue, Quezon
City; (6) Calamba Laguna; (7) Naga City; (8) Iloilo City; (9) Cebu City; (10)
Tacloban City; (11) Pagadian City; (12) Cagayan De Oro; (13) Davao City; (14)
Kidapawan, Cotabato; and (15) Butuan City.
What Are The General Requirements In Registering A Cooperative?
You will have to submit four copies of the Economic Survey, By- Laws and
Article of Cooperation.
The Article of Cooperation should be accompanied by the following:
Bonds of the accountable officers (any director, officer and employee handling
funds, securities offices and employee handling funds, securities or
properties on behalf of the cooperative. The board of directors determine the
amount of bonds required based on the initial network which shall include the
paid-up capital, membership fees and other assets of the cooperative at the
time of registration); and
Sworn statement of the treasurer showing that at least 25% of the authorized
share has been subscribed and at least 25% of the total subscription has been
paid. The paid-up capital must not be less than P2,000. It must be
noted that no member may own more than 20% of the subscribed capital; and that
each share must not be less than P1.00