Philippine Christian University

HISTORY
OF
COOPERATIVES
(INTERNATIONAL)
The cooperative is operating in a market (or free
market) environment. The cooperative is both an
alliance and a corporate vehicle that offers the
individual participants greater opportunities in that
market. They can achieve more as cooperators than
working as individuals. In short, cooperation is a form
of economic organization for when the market fails.
We take the position that, in many cases, businesses
are not fit to beneficially participate in the global
market business without cooperating and reorganizing.
Their partners may be colleagues, even competitors,
or other stakeholders in their supply chain or region.
They cooperate, as their market will fail from their
perspective. Cooperatives, societies, communities
and other forms of groups exist because it is
necessary to create a buffer or countervailing power
that assists to cope with the undesired effects of
global market developments—undesired, of course,
as seen by the members of those co-ops and
communities.
 The history of mankind, in a
large part, is the struggle for
security against poverty.
In many parts of

AFRICA
LA
TI N
ASIA AM
ER
IC A
it is a battle against debt or credit.
 Ancient writings show that credit
and interest have been mankind’s
problems for more than 4, 000
years.

Interest is considered rent paid for use of other people’s

money. However, the poor have always to reckon with
excessive rates and harsh term of interest in their times of
need. They have always been the victims since earliest
times.
 IN 2000 BC

Hammurabi as King
of Babylon included

Some laws on credit to promote the welfare of the common

people against high interest rates by few money-lenders.
In England, concern for the miserable conditions of the
workers associated with the industrial revolution led to two
known experiments on cooperatives.

Robert Owen of Wales in his New Lanark Mill

community and

William King of Brighton in his writings

maintained that

“individual competition is an evil which does not benefit

the people.”
They advocated that cooperation is needed to achieve
results that will benefit all. The other experiment
which reached more people and had more success and
lasting influence was the
Rochdale Cooperative Store in 1844.
Rochdale Equitable Pioneers Society - The
industrial Revolution completely changed the
lives of people living in Europe. Together with
progress, it brought misery. Many left the
countryside to work in factories for long hours
with little pay. There was no state help, no
sickness benefit and no free education. Among
these exploited were children who worked long
hours in the factories instead of going to
school. Soon there was famine. In history this
was often referred to as the
Hungry Forties(1840’s).
It was at this time that a group of 28 people met together to
discuss what they could do to ease their suffering. It was
Saturday afternoon in 1843 in the town of Rochdale, England.
One member of the group, Charles Howarth, suggested that
each of them save two dimes a week and use their savings to
start a little store of their own. They could buy their goods
cheaper at whole sale prices. Someone objected by pointing
out that it had been tried but failed. Further analysing the
problem, they discovered that previous ventures failed
because customers were allowed to buy goods on credit. Most
often they could not pay their debts so that time came when
the store had to close for lack of money to pay whole sale for
goods ordered. To solve the problem, there was a suggestion
to make a rule of paying cash for everything bought. Then they
will always have cash to pay the wholesale.
 HISTORY
OF
COOPERATIVES
(PHILIPPINES)
After defeating Spain in 1898, the United States
acquired the Philippines as a colonial territory. In
introducing western civilization to the country, the
United States included the idea of credit unions.
In the fact, Edward Filene’s first thought after
observing Credit Unions in India in 1907, was to
introduce it to the Philippines which was a newly
acquired Asian territory of the USA. Later,
missionaries to the by succeeded in introducing
the movement.
The Vigan Credit Union
which was organized in
1938 by Rev. Allen Huber, a
Protestant missionary, was
a proof of this. He
organized over 30 Credit
Unions before he and his
wife were taken prisoners
by the Japanese in World
War II.
Even before the advent of
missionaries in the Philippines
several attempts were made by
the Filipinos to introduce Credit
Unions to their fellowmen. Among
them was Dr. Jose Rizal who
must have seen them work
during his travel in Europe. He
tried to introduce it in Dapitan
when he was exiled by the
Spanish government.
 In 1907, Governor Teodoro Sandiko of
Bulacan drafted a bill to organize Credit
Unions patterned after those of Raiffeisen’s.

Presented 1908 by Rep. Alberto Baretto of Zambales

it was approved by the Philippine Assembly (Lower
House of the Legislature) but failed to get the
approval of the Philippine Commission (Upper
body of the Legislature).
The second attempt to institutionalize rural credit
cooperatives was through Act. No. 2508 it met
success for it was passed in both Houses of the
Philippine Legislature. However, lack of
cooperative education and training resulted in its
poor implementation.
In 1952, the Agricultural Credit and
Cooperative Financing Administration
(ACCFA) were created by Republic Act
821 to the Agricultural Credit
Administration (ACA) in taking over
ACCFA’s functions reported that as of
700 Farmers Cooperative Marketing
Associations (FACOMAS) that ACCFA
organized, only 120 were operating.
Republic Act No. 2023 enacted in 1957
sought to promote, organize and
supervise all types of non-agricultural
cooperatives. Records, however, showed
that in 1971, of the total registered 4673
cooperatives only 633 were reported
active.
All the sad experiences on
cooperatives were due to a large
extent to insufficient cooperative
education and experience and
the lower standard of living
caused by the war. The advent of
Martial Law in the country in
September, 1972 sought to
remedy the situation.
Presidential Decree 175 entitled “Strengthening the
Cooperative Movement’ provided the basis for a “sound
and systematic program’. It sought to make cooperative a
means of affecting income redistribution so that they were
tied up with the land reform program. It required
attitudinal change by emphasizing learning, discipline, and
saving. Believing that cooperatives should be started by the
mass base, the then Bureau of Cooperatives introduced
the Samahang Nayon Stage. Only after meeting the
requirements of at least 250 members and pooled savings
in shares worth at least P25 000 000.00 can the Samahang
Nayon be registered as a Kilusang Bayan or a full-fledged
cooperative.
As of December, 1974, the cooperatives development
program had reached 71 out of the 73 target provinces. It
covered 22, 808 barrios with a total collection in shares
and savings of P23 803 251. 05. The average membership
per Samahang Nayon was 46 with an average collection of
p1 952.67.
The cooperatives program included the establishment of
the following development projects.

• Cooperative Insurance System of the Philippine (CISP)

•Area Marketing Cooperatives (AMC)
•National Publishing Cooperative (NPC)
•Cooperative Rural Bank (CRB)
• Cooperative Marketing System of the Philippines (CMSP)
Since 1915 (Republic Act 2508 providing for Agricultural
Credit Cooperative Associations), many laws have been
passed including P.D. 175 in 1973. On March 10, 1990,
Pres. Corazon C. Aquino signed into law R.A. 6938 – the
New Cooperative Code of the Philippines and R.A. 6939 –
The Act Creating the Cooperative Development Authority
(CDA).
It was hoped that the enactment of these new laws would
pave the way for the accelerated growth and development
of Cooperatives in the Philippines. The new laws simplified
and synchronized the registration and administration of
cooperatives of all types.
Credit Unions were born of adversity
amidst an atmosphere of extreme poverty
in Europe. Just who started them is vague.
It is believed that in France, Buchez,
Proudhon, and Louis Blanc as early as
1796, in their discussion first evolved the
cooperative idea.
A cooperative federation is formed
primarily to engage in business
needed by its member cooperatives.
Membership in a federation requires
primary cooperatives to invest or give
capital contribution to be used by the
federation in its business operations.
Members of a federation equitably
receive share of the net surplus based
on their transactions or economic
participation.
A cooperative union engages in non
business or non-surplus
generating services that are needed
to build the institutional capability of
cooperatives and to strengthen the
movement in general. Examples of
these services are representation of
members in various for a, advocacy
work, information dissemination,
research, education, publication and
networking. A union may raise funds
from private and government donors.
What are COOPERATIVES?
 COOPERATIVE
A CO-OPERATIVE is an
autonomous association of persons
united voluntarily to meet their
common economic, social, and
cultural needs and aspirations
through a jointly-owed and
democratically-controlled enterprise.
Biblical Foundation of
Cooperatives
Acts 4:32-34
“All the believers were one in heart and mind. No
one claimed that any of his possessions was his
own, but they shared everything they had. 33 with
great power and apostles continued to testify to
the resurrection of the Lord Jesus and much grace
was upon them all. 34 There were no needy
persons among upon them. From t time to time
those who owned lands or houses sold them,
brought the money from the sales and put it at the
apostle’s feet and it was distributed to anyone as
he had need”
 Main characteristics of
Coop Enterprise

Owned and controlled

by members who use
its services
(identity of owner &user)

Has both economic

and social purpose
 DISTINGUISHING COOPS FROM
OTHER BUSINESS
COOPS
Main purpose is to provide
service & savings to
members.
Essentially union of persons.
Control is democratic; each
member has one vote
Ownership in the hands of
members who use the service
Surplus refunded to
members in proportion to
OTHER BUSINESS
Main purpose is to make
profit for investors
Essentially a union of capital
Control is based on
number of voting shares
Ownership in the hands
of investors
Surplus allocated in
proportion to investment
Shares may be freely traded &
fluctuate in value
 PHILOSOPHY

“Not for PROFIT not for

CHARITY but for SERVICE”
Section 12
Constitution and
By-Laws

Services over and above profit shall be

overriding consideration of the
cooperative in the pursuit of its goals
and in the operation of its business.
 ANCHORS OF DECISION
IN MAKING COOPERATIVES
International Coop-Alliance
Principles and Practices

RA 6938
Government
Regulations
CDA/DOF Manual of Regulations
•Dole
•SSS/Philhealth
Art of Cooperation/Constitution and •LGU-Permits
•HDMF
By-Laws •BIR-Taxation

Coop Policies and Procedures

Rules and Regulations

Membership Control. Subject to
provisions of RA 6938 and the
rules and regulations prescribed by
the authority, the final decision in the
management and administration of
the affairs of the cooperative is vested
in the General Assembly.
GENERAL ASSEMBLY. The General Assembly of
the cooperative is composed of all the members
entitled to vote duly assembled and constituting a
quorum. In the case of cooperatives with numerous
and dispersed membership, the general assembly
may be composed of delegates elected by each
sector, chapter or district of the cooperative in
accordance with the rules and regulations of the
authority.
 Subject to RA 6938, relevant rules
GENERAL and regulations, the GA is the
ASSEMBLY supreme body where all authorities
emanate from

AUDIT ETHICS MEDIATIO/

CONCILIATION
BOARD OF ELECTION CREDIT
COMMITTEE COMMITTEE DIRECTORS
Sets the
COMMITTEE COMMITTEE
Conducts Prepares for
Decide intra- strategic Processes and
financial, and facilitates decides on loan
management, cooperative direction and
the conduct of application*
property and disputes, sets formulates Applicable for coups
election
social audit policies with credit services*

Prepares minutes In-charge of overall

and safe keeps of financial
SECRETARY TREASURER management of the
official
documents coop and acts as
chief financial
officer
Performs study EDUCATION AND
SPECIAL Plans and
function for the MEMBERSHIP
BOD Ad Hoc COMMITTEE COMMITTEE
implement s
education and
training programs

Manages the day- GENERAL

to-day operations MANAGER
Performs specific
MANAGEMENT tasks related to the
STAFF day-to-day
operations
 UNIQUENESS OF COOP AS BUSINESS
ENTERPRISE
1. Big Business
Those Who Own Those Who Control Those Who Use

Investors Management Costumers

2. Small Scale Business

Those Who Own and Those Who Use
Control
3. Cooperatives
The same body of people who own, control and
use the service
 • Illustrative Examples
Owners Controllers Costumers

Corporation
e.g. San Stockholders Management General Public
Miguel
Corporation

Variety Store
e.g. Nana's Owner [Nena] Owner [Nena] General Public
Sari-sari store

Member thru the

GA elect BOD and
Cooperative Member Committees who Member
manages the
coop
 Coops Do All
Types of
Economic
Activities

Financial services
retail, insurance, agricultural production &
marketing, industrial production, fisheries,
dairy, housing, transport, utilities
(electricity, water, gas, etc.), travel, other
services.
New generation coops

medical, child, care, social

care, funeral, tourism, sports,
schools, orchestras, etc.
 TYPES OF COOPERATIVES

Credit Cooperative is
one which promote thrift
among its members and
creates funds in order to
grant loan for productive
and provident purposes;
Consumers cooperative is one of
the primary purpose of which is to
procure and distribute commodities
to members and non members;
 Producers Cooperative is
one that undertakes joint
production whether
agricultural or industrial.

Marketing Cooperative is
one which engages in the
supply of production inputs
to members and markets
their products;
Service Cooperative is one which
engages in medical and dental care,
hospitalization, transportation, insurance,
housing, labor, electric light and power,
communication and other services;
Multipurpose Cooperative
is one which combines two or
more of the business
activities of these different
types of cooperatives.

Workers Cooperative is a
type of cooperative which
creates work through
collective self-employment
 PRINCIPLES AND
PRACTICES
PRINCIPLES

an embodiment of ideas that

determinate the essential
characteristics of an
organization, distinguishing
it from all other
organizations.
 PRACTICES
a specific and practical application
of a principle developed and
agreed on among co-operators of a
given country.

Practices are in accordance with

unique conditions and
circumstances, and thus may vary
as to both time and space. In no
situation however should a practice
run counter to the essence of a
given principle.
 CO-OP VALUES
Co-operatives are based on the values of self-help,
self-responsibility, democracy, equality, equity,
and solidarity.

In the tradition of their founders, co-operative

members believe in the ethical values of honesty,
openness, social responsibility and caring for
others:
1.Self-help
- the act of helping of improving yourself
without relying on anyone else

-All people can and should strive to control

their own destiny

-Full individual development can take

place only in association with others .

-Members need to help themselves

2. Self-responsibility
(fact of being responsible)
Members have responsibility :
-for the establishment and
continuing vitality their co-
operative
-for ensuring that their co-
operative remains independent
-of promoting their co-operative
among their families, friends and
acquaintances
 3. Democracy
(rule by-for-of the people or
political authority)

-includes considerations of
rights and responsibilities of
members
-participation in the
decision-making in the
general assembly, members/
ownership meeting
 4. Equality 5. Equity
(likeness or sameness
(the state, quality, or ideal
in quality,
power, status or degree) of being just, impartial, and
fair)
-members have rights of
participation, information, a right to -Members should be equitably
be heard, and making decisions. rewarded for their participation
in the co-operative, through:
-Patronage dividends
-allocations to capital reserves
in their name
-reduction in charges
 6. Solidarity
(a union of interests or purposes or sympathies among
members of a group, interdependence)

-
means that co-operators and co-
operatives stand together
-members have the
responsibility to ensure that all
members are treated as fairly as
possible
 7. Honesty
(quality of being honest; integrity)
-Honest dealings with members such as honest
measurements, high quality, fair prices and
calculation of interest payments.

-coops are distinguished in the market-place

partly because they insist on honest
measurements, high quality, and fair prices.

-co-operatives have aspired honest dealings

with their members, which in turn has led to
honest dealings with non-members
 8. Openness
(an attitude of ready accessibility, not secretive)

-reports to the General -regularly reveals to their

membership, the public and
Assembly
government important
-conducts consultation
information on their operations
-accepts suggestions
 9. Social Responsibility
(the idea that businesses should not function immorally, but instead
should contribute to the welfare of their communities)

-they are open to the members of the community, and they have
commitment to assist individuals in helping themselves

-concerned about the health of

individuals within the community.

-they therefore, have an obligation to

strive to be socially responsible “in
all their activities”
 10. Caring for others
(assisting/helping other coops)

-within their financial capacity to do

so, many cooperatives have made
significant contributions of human
and financial resources to their
communities.

-big coops have provided extensive

assistance to the growth of
cooperatives throughout the
developing world.
 PRINCIPLES
1. Voluntary and Open Membership

2. Democratic Member Control

3. Member Economic Participation

4. Autonomy and Independence

5. Education, Training and Information

6. Co-operation Among Co-operatives

7. Concern for Community

 First Principle: Open and Voluntary Membership

Cooperatives are voluntary organizations, open to all

persons able to use their services and willing to accept the
responsibilities of membership, without gender, social,
racial, political or religious discrimination.

Practices:

-No compulsory membership

-No discrimination against any person on account of

religion, race or political belief.
Second Principle:
Co-operatives are democratic organizations controlled by
their members, who actively participate in setting their policies and
making decisions. Men and women serving as elected
representatives are accountable to the membership. In primary Co-
operatives members have equal voting rights ( one member, one
vote) and Co-operatives at other levels are organized in a democratic
manner.

Practices:
-One man, one vote & No proxy voting
-General assembly as supreme authority
-Decision-making by majority vote
-Direct or indirect participation of all members in the control of the
organization (i.e. through the election of officers, board of directors, audit
committee, other committees).
 Third Principle: Member Economic
Participation
Members contribute equitability to, and democratically control, the
capital of their Co-operative. At least part of that capital is usually
the common property of the co-operative. They usually receive
limited compensation, if any, on capital subscribed as a condition of
membership. Members allocate surpluses for any or all of the
following purposes; developing
the co-operative, possibly by setting up reserves , part of which at
least would be indivisible; benefiting members in proportion to their
transactions with the co-operative, and supporting other activities
approved by the membership.
Practices:
-Limited interest on share capital

-Limitation of individual share contribution,

not more than 20% of total capital

-Provision of reserve funds

-Provision of reserves for the development of

the coop

-Distribution of interest on Capital and

Patronage refund
 Fourth Principle Autonomy and
Independence
Co-operatives are autonomous, self-help organizations controlled by
their members. If they enter into agreement with other organizations,
including governments, or raise capital from external sources, they
do so on terms that ensure democratic control of their members and
maintain their co-opreative autonomy.
Practices:

-The General Assembly is the coop’s supreme authority.

-Leadership is confined to the coop members.

-The control and leadership is through members democratically -

elected to high responsibilities and the independence of the coop
remains even when the coop becomes involved with other
organizations such as funding agencies.
Fifth Principle: Education, Training
and Information

Co-operatives provide education

and training for their members,
elected representatives, managers
and employees so that they can
contribute effectively to the
development of their co-operatives.
They inform the general public-
particularly young people and
opinion leaders- about the nature
and benefits of co-operation.
Practices:

-Appointment of an education committee

-Provision of an education fund out of net income or

from gross income

-Requirements of pre-membership education before

admission

-Ownership or membership meetings

-Continuous training of officers and staff.
 Sixth Principle: Cooperation Among
Cooperatives
Cooperatives serve their members most effectively and strengthen the
co-operative movement by working together through local, national,
regional and international structures.

Practices:

-Membership in secondary and tertiary organization

-Participation in economic integration projects, like central fund,

inter-coop trade, cooperative insurance, local, national, regional and
international linkages.
 Seventh Principle:
Co-operatives work for the sustainable development of
their communities through policies accepted by their
members.

Practice:
Members ensure that the policies they make will benefit the
whole cooperative community (work towards improving
their living standards based on their social values without
compromising the resources available for future
generations)
 Koop Aralan (overview)
There is one reality in cooperatives that
many of us already know but which is
not given much importance: Many rank
and file staffs have no or very little
training on cooperatives.
This often results in low morale, low commitment of the staff while
performing their jobs in the cooperative. To address this, the Coop
Institute has developed the KoopAralan program. This project aims
to provide training to the coops’ rank and file, who are mostly left
out of training programs (most programs are directed to managers
and elected officers). These training programs will be delivered
through distance education, reaching a wide audience
simultaneously across the country.
The education materials of KoopAralan are in the form of easy-to-
read booklets. Organized in a series, these booklets are meant to
increase and broaden the staff’s knowledge of the coop enterprise
and address work-related issues.
Specifically, the KoopAralan:

Equips enrolees with working knowledge in coop. Modules

are divided into sub-modules:

Time and reader friendly

Can be completed on weekly basis

Institutionalizes staff training with merit system Is part of

staff development program
Is short-term, ladderized system of education
Is evidenced by a certificate of Completion to be issued by
Coop Institute
 Features
-A distance education course designed to imbue the staff
with coop knowledge needed to make them appreciate and
value their work in the cooperative.

-This is a program designed to institutionalize staff training

at the coop level, involving the Human Resource staff and
the coop Training Coordinator as the lead mentors.

-This can be considered a foundation for a long-term staff

development program in the coop.

-It is short-term, ladderized system of education.

-Modules are divided into sub-modules which is
time friendly to enrolees as they can be
read/absorbed on a weekly basis.
-The modules can be completed within two to
three months depending on the pace of students.
-After each module, a test will be given to the
enrollee to ascertain if the enrollee is ready to
proceed to the next module; passers shall be
given a certificate of module completion issued by
the Coop Institute.
-The certificate of course completion can be used
as basis for staff evaluation as it can carry
additional merits for career advancement,
personal growth, promotion and salary increase.
-The Coop Institute will provide the participating
coop with the grades of its enrollees.
 • Interested staff/officer enroll to the KoopAralan
1.
PROCEDURES
Distance Education Program

• Coop Institute provide handbooks to enrollees [administered by

2. Coop Hr/Training Officer or EDCOM Chairman

• Enrollees read handbook on weekly basis

3.

• Enrollees take tests per sub-modules

4.

• Coop Institute computes result of exam and issues Certificate

5. of Course Completion

• Coop uses Certificate of Course Completion for merit rating

6. purposes