Definition of Cooperative Definition of Cooperative: Trainer's Training For Coop Development Officers

Cooperative is significantly
characterized with unique features

that set it apart from other form of
business;
* Definition
* Basis foundation (principles)
* Distinguishing features (socio-
economic doctrines)
* Defined economic participation
Trainer's Training for Coop Development Officers
Definition of Cooperative Definition of Cooperative

Article 3 of RA 9520
A cooperative is an autonomous and patronizing their products and
duly registered association of services and accepting a fair share
persons, with a common bond of of the risks and benefits of the
interest, who have voluntarily joined undertaking in accordance with
together to achieve their social, universally accepted cooperative
economic, and cultural needs and principles.
aspirations by making equitable
contributions to the capital required
Trainer's Training for Coop Development Officers Trainer's Training for Coop Development Officers
1
COOP
Cooperative is operated for the

 Capitalized
benefit of the members;
 Owned
 Operated
Is composed of the members;
 Patronize
Managed by the membership
End goal Common Bond of Membership
 Economic and social betterment of

members Shall refer to the condition
 Uplift the standard of living and where members associate
quality of life of members themselves to attain their common
 Elimination of economic exploitation goals and objectives which may
 Members democratic control either be residential, occupational,
associational, and institutional.
2
Common Bond of Membership Common Bond of Membership
 RESIDENTIAL  ASSOCIATIONAL
members are working and/or members come from a registered
residing in the same place. and/or recognized association.
Recognized association means
legitimate pubic group of persons
 INSTITUTIONAL certified by any applicable
members consist of employees, government entity.
workers and/or officers of a
particular institution.  Occupational – members come from the same or
allied profession or occupation.
Common Bond of Membership Cooperative Principles
VOLUNTARY AND OPEN MEMBERSHIP
 OCCUPATIONAL
 DEMOCRATIC MEMBER CONTROL
members come from the same or
allied profession or occupation.
 MEMBER ECONOMIC PARTICIPATION
 AUTONOMY AND INDEPENDENCE
3
Cooperative Principles Voluntary and Open Membership
Cooperatives are voluntary

 EDUCATION, TRAINING AND organizations, open to all persons who
INFORMATION are able to use their services and willing
to accept the responsibilities of
 COOPERATION AMONG membership, without gender, social,
COOPERATIVES racial, cultural, political or religious
discrimination.
 CONCERN FOR COMMUNITY
Democratic Member Control Member Economic Participation
Cooperatives are democratic organizations

that are controlled by their members who Members contribute equitably to,
actively participate in setting policies and and democratically control, the
making decisions.
capital of their cooperative.
Men and women serving as elected
representatives, directors or officers are
accountable to the membership. At least part of that capital is the
“one-member, one-vote principle” common property of the cooperative.
Limitation on share capital holding
Defined powers and rights of the general assembly that Expectation and duty of the members
cannot be delegated
to patronize and support the business
of the cooperative
4
Autonomy and Independence Education, Training and Information
Cooperatives are autonomous, self-help Cooperatives provide education and

organizations controlled by their training for their members, elected &
members. In entering into agreements appointed representatives, managers and
with government, including other employees so they can contribute effectively
organizations, or raise capital from and efficiently to the development of their
external sources, they do so that ensure cooperatives.
democratic control of members and Coops also inform the general public,
maintain cooperative autonomy.
particularly young people and leaders, about
the nature and benefits of cooperation.
Cooperation Among Cooperatives Concern for Community
Cooperatives serve their members most Cooperatives work for the sustainable
effectively and strengthen the movement by development of their communities and the
working together through local, national, environment through policies approved by their
regional and international structures.
members.
5
Cooperative Powers and Capacities Cooperative Powers and Capacities
 To purchase, receive, take or grant, hold, convey,

 To the exclusive use of its registered name, to sell, lease, pledge, mortgage, and otherwise deal
sue and be sued; with such real and personal property as the
 Of succession; transaction of the lawful affairs of the
 To amend its articles of cooperation in cooperative may reasonably and necessarily
accordance with the provisions of the require, subject to the limitations prescribed by
law and the Constitution;
Cooperative Code;
 To adopt bylaws not contrary to law, morals  To enter into division, merger or consolidation,
as provided in the Cooperative Code;
or public policy, and to amend and repeal the
same in accordance with this Code;  To form subsidiary cooperatives and join
federations or unions, as provided in this Code;
 To avail of loans, be entitled to credit and to To avail of preferential rights granted to
accept and receive grants, donations and cooperatives under Republic Act No. 7160,
assistance from foreign and domestic sources, otherwise known as the Local Government
subject to the conditions of said loans, credits, Code, and other laws, particularly those in the
grants, donations or assistance that will not grant of franchises to establish, construct, operate
undermine the autonomy of the cooperative. and maintain ferries, wharves, markets or
The Authority, upon written request, shall slaughterhouses and to lease public utilities,
provide necessary assistance in the documentary including access to extension and on-site research
requirements for the loans, credit, grants, services and facilities related to agriculture and
donations and other financial support; fishery activities;
6
 To organize and operate schools in accordance  To have an official postal address registered with
with Republic Act No. 9155, Governance of Basic the CDA where all notices and communications
shall be sent.
Education Act of 2001 and other pertinent laws;
and,  To keep certain, books pertaining to the
cooperative and to make the same available and
 To exercise such other powers granted by this open to its members and representatives of the
Code or necessary to carry out its purpose or authority for the inspection during reasonable
purposes as stated in its Articles of cooperation. office hours at its official address.
Cooperative Powers and Capacities Responsibilities of

Every Cooperative
 To keep and maintain records of accounts

reflecting the true and correct condition of the  To have an official postal address registered with
results of the operation of the cooperative in the CDA where all notices and communications
accordance with generally accepted accounting shall be sent.
principles and to annually publish duly Audited  To keep certain, books pertaining to the
FS. cooperative and to make the same available and
 To prepared and publish annual reports of the open to its members and representatives of the
affairs of the cooperative at the end of every authority for the inspection during reasonable
fiscal year, to furnish copies of the same to all its office hours at its official address.
members of records, and to file a copy thereof
with the CDA within 60 days from the end of
every fiscal year.
7
Responsibilities of Responsibilities of
Every Cooperative Every Cooperative
 To keep and maintain records of accounts

reflecting the true and correct condition of the
results of the operation of the cooperative in • Bonding of accountable officers
accordance with generally accepted accounting
principles and to annually publish duly Audited
FS. • Maintain member’s registry book
 To prepare and publish annual reports of the
affairs of the cooperative at the end of every
fiscal year, to furnish copies of the same to all its
members of records, and to file a copy thereof
with the CDA within 120 days from the end of
every fiscal year.
Capital Sources of Funds
Capital Sources.- Cooperatives may derive

their capital from any or all of the following
sources:
"(1) Member’s share capital;
"(2) Loans and borrowings including deposits;
"(3) Revolving capital which consists of the
deferred payment of patronage refunds, or
interest on share capital; and
8
Capital Sources of Funds Capital Sources of Funds
(4) Subsidies, donations, legacies, grants, aids and

such other assistance from any local or foreign
"ART. 73. Limitation on Share Capital Holdings.-
institution whether public or private: Provided, That
No member of primary cooperative other than
capital coming from such subsides, donations,
cooperative itself shall own or hold more than
legacies, grants, aids and other assistance shall not
ten per centum (10%) of the share capital of the
be divided into individual share capital holdings at any
cooperative.
time but shall instead form part of the donated capital
or fund of the cooperative.
Upon dissolution, such donated capital shall be
subject to escheat.
Capital Sources of Funds
ALLOCATION AND
""ART.75. Capital Build-Up.- Te bylaws of every DISTRIBUTION OF NET
cooperative shall be provided for a reasonable
and realistic member capital build-up program SURPLUS
to allow the continuing growth of the members’
investment in their cooperative as their
economic conditions continue to improve.
9
Sources of Funds Sources of Funds
• INTERNAL SOURCES • INTERNAL SOURCES
- Deposits - time
- Share Capital Savings
- Revolving Capital
- Initial Subscription
- Interest on Share Capital
- Continuous Capital Build-up - Patronage Refund
RETENTION
Sources of Funds DOING BUSINESS

REVENUES:
• External Sources Lending (credit)
Sales (consumers; marketing)
– Loan/s
Service (service contract; management fee; etc)
OTHER REVENUES (MEMBERSHIP FEES; ETC.)
– Borrowing/s
COST:
– Subsidies/Grants/Aids/Donations COST TO SELL
COST OF SERVICE
Others
10
Doing…….. CONT. DOING ..... Cont.
OPERATING EXPENSES:
Income:
Salaries & wages
Interest on Loan 100,000
Employees benefits
Membership fee 5,000
Rental
Other Income 3,000
Supplies Total 108,000
Meetings/Conferences Less Expenses:
Gen. Assembly expense Salaries and wages 12.000
Members benefit Organizational expenses 20,000
Taxes and Licenses 1,000
others
bond of Account Officers 2,000
Total 34,000
NET SURPLUS /(LOSSES) Net Surplus
74,000
DOING…….cont. ALLOCATION AND DISTRIBUTION
NET SURPLUS
Net Surplus – shall not be LESS: STATUTORY FUNDS
construed as profit but as RESERVE FUND
excess of payments made by the COOPERATIVE EDUCATION
members for the loans & TRAINING FUND
borrowed, or the goods and COMMUNITY DEVELOPMENT
FUND
services bought by them.
OPTIONAL FUND
NET SURPUS FOR DISTRIBUTION
BACK TO MEMBERS
11
Allocation and Distribution of Net Surplus Allocation and Distribution of Net Surplus
General Reserve Fund shall be used for the stability of

Order of Distribution: the coop An amount for the reserve fund which
shall be at least ten per centum (10%) of net
Not less than 10% for General Reserve surplus:Provided, That, in the first five (5) years of
operation after registration, this amount shall not
Fund be less than fifty per centum (50%) of the net
surplus
Education and training Fund – half of the amount
Not more than 10% for Coop maybe spent by coop for their education and
training while the other half be credited to apex
Education and Training Fund organization.
Optional Fund – use for land and building and any
Not more than 7% for Optional fund other necessary fund
Community Development Fund –shall be used for
Not less than 3% for Community projects or activities that will benefit the community
where the cooperaive operates.
Development fund
Allocation and Distribution of Net Surplus Allocation and Distribution of Net Surplus
Income:
The remaining net surplus Interest on Loan 100,000
shall be made available to Membership fee 5,000
Other Income 3,000
members in the form of : Total 108,000
Less Expenses:
1.Interest on share capital Salaries and wages 12.000
Organizational expenses 20,000
2.Patronage refund Taxes and Licenses 1,000
bond of Account Officers 2,000
Total 34,000
Net Surplus 74,000
12
Distribution of net Surplus Distribution of net Surplus
Net Surplus 74,000

Statutory Funds: For distribution on Interest on Share
10% General Reserve Fund 7,400 Capital and Patronage Refund 51,800
10% Education & Trng. Fund 7,400 INTEREST ON SHARE CAPITAL
7% Optional fund 5,180 PATRONAGE REFUND
3% Community Dev’t. Fund 2,220
Total SR 22,200
For distribution on Interest on Share
Capital and Patronage Refund 51,800
Distribution of net Surplus

Distribution of Net Surplus
Formula: Rate of Interest on share capital (ISC) =
Rate of Interest on share capital (ISC)= % (Net Surplus - Statutory Reserves
% (Net Surplus - Statutory Reserves Total Average share Month (TASM)
Total Average share Month (TASM)
Assuming 70% of 51,800 is for ISC = 36,260
Rate of Patronage Refund (PR) = Assuming 30% of 51,800 is for PR = 15,540
% (Net Surplus - Statutory Reserves
Interest on Loans
13
Rate of Interest on share capital = Rate of Patronage Refund =
% (Net Surplus - Statutory Reserves % (Net Surplus - Statutory Reserves
Total Average share Month (TASM) Interest on Loans
70% (51,800 - 22,200) 36,260 30% OF 51,800 = 15,540

185,000 185,000 Interest on Loans = 100,000
15,540 = 16%
20% 100,000
14

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Cooperative is significantly

characterized with unique features

Trainer's Training for Coop Development Officers