“What is cooperative? Role of Cooperative in Socio and Economic

Development

Jo B. BitonioRegional Director

Presented at Alaminos City CMCOct. 21, 2017

What is Cooperative?• Autonomous• Duly registered association of persons• With a common bond of interest• Voluntarily joined together to achieve their

social, economic and cultural needs and aspirations

• Making equitable contributions to the capital required

• Patronizing their products and services• Accepting a fair share of the risks and benefits of

the undertaking in accordance with universally accepted cooperative principles.

Art 3. RA 9520

Cooperatives are formed to meet peoples’ mutual needs. They are based on the powerful idea that together, a group of people can achieve goals that none of them could achieve alone

CDA Mandate

• Promote the viability and growth of cooperatives as instruments of equity, social justice and economic development in fulfillment of the mandate in section 15, Article XII of the Constitution.

equitySocial Justice

Eco Devt

Role of Cooperative in Social

Development?

Understanding Social DevelopmentSocial means relating to society or its organization to grow into fuller or mature conditionDevelopMent defined as a result, condition, process or is defined as of doing something Social Development refers to the progressive improvements in the living conditions of quality of life enjoyed by society and shared by its members

According to Bilance, 1997 “Social Development is the promotion of a sustainable society that is worthy of human dignity by empowering marginalized groups, women and men, to undertake their own development, to improve their social and economic position and to acquire their rightful place in society.”

• The Copenhagen Social Summit, 1995 defined Social Development in terms of three basic criteria:

Poverty Eradication

Employment

Generation

Social Harmony

According to Amartya Sen, 1995 “Social Development is equality of social opportunities”

According to M.S Gore, the concept of social development is inclusive of economic development but it emphasizes the development of the society in totality that is, in its economic, political, social and cultural aspects

• In a narrower sense, it would be used with reference to the human welfare aspects of development, that is improving the quality of life and more equitable distribution of material and cultural goods.

• In the broadest sense “it signifies all aspects of development that are of collective nature pertaining to the society as a whole.

Social development may be used in connection with structural transformation in society seeking changes in the system of stratification and in degree of mobility.

Elite Population

Middle Population

Poverty Threshold

Social development may be used in connection with structural transformation in society seeking changes in the system of stratification and in degree of mobility.

Agenda 2030

• The Sustainable Development Goals (SDGs), otherwise known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity.

These 17 Goals build on the successes of the Millennium Development Goals, while including new areas such as climate change, economic inequality, innovation, sustainable consumption, peace and justice, among other priorities. The goals are interconnected – often the key to success on one will involve tackling issues more commonly associated with another.

Cooperatives can engage in a broad range of activities, the most common being in

(i) education, training, and human resource development;

(ii) community development; iii) enterprise development and employment

generation(iv) health and nutrition;(v)law, advocacy, and politics; and(vi) sustainable development

The community development fund shall be used for projects or activities that will benefit the community where the cooperative operates.

Social Development

• Social Justice (Panlipunang katarungan)

• Social Responsibilities

• Cooperatives are based on principles and values that speak directly to the issue of social justice. Most traditional cooperatives follow the seven principles of cooperative identity, promoted by the International Cooperative Alliance (ICA),

• These principles call for the practice of democracy, equality, equity and solidarity. Cooperatives also embrace the ethical values of honesty, openness, social responsibility and caring for others.

• With these principles and values at the core of cooperative operations, the poor, excluded and marginalized sectors of society are usually served well by cooperatives

Social Justice

Social Justice

• Social justice which could be seen as equal opportunity treatment of all persons in society. It focuses on the dignity of each individual.

• Social justice promotes the participation each individual in the development of their society and to enjoy the rewards of that development.

• Cooperatives have the responsibility to ensure this happens

Social Audit

• The process whereby a cooperative can account for its social performance, report on and improve that performance. It assesses the social impact and ethical performance of the cooperative in relation to its vision, mission, goals, and Code of Social Responsibility

It is also process to assess the cooperative’s contribution for the upliftment of the status not only to its members’ economic needs but also social needs and the community where it operates. The cooperative’s actual performance and accomplishment are compared its vision, goals, and social responsibility as it relates to the impact not only to the community but to its regular members as the immediate beneficiary of the decisions and actions it promulgated, passed and implemented.

Social Audit will serve as control mechanism to account for its social performance and evaluate its impact in the community taking into account the community development fund which shall be used for projects or activities that will benefit the community where the cooperative operates.

Social Audit validates the support of the cooperative to the 7th cooperative principles, i.e. the “Concern for Community” and determines whether the cooperative work for the community’s sustainable development through policies approved by their members. The audit focuses not only to the economic side of the cooperative but also the social aspect of the organization and appraises

Component of the Social Audit Tool

Social Audit for cooperative shall look into the following components with their corresponding points:

I. Organization This is a measurement of cooperative's fulfilment of its vision, mission and goals, feedback mechanisms, code of good governance and ethical standards.

II. Membership Measurement on how the cooperative responded to the need of members, observed governance practices, considered provision for benefits of members, and involved members in the affairs of the cooperative. its collaborative programs

Component of the Social Audit Tool

III. Staff/Employees Assessment of the cooperative's fulfilment of the needs and welfare of the employees in terms of safety workplace and sanitation, including the provision for compensation and benefits.

IV. Cooperation among Cooperatives Measurement of the cooperative's affiliation/s and linkages to federations/unions and other cooperatives.

V. Community and Nation Determines the involvement of the cooperative and its contributions to the community and nation, in general.

VI. Network Alliance and Linkages Assessment on how the cooperative relates to other organization and its collaborative programs

Cooperatives accord members opportunity, protection and empowerment - essential elements in uplifting them from degradation and poverty

Role of Cooperative in Economic

Development?

•  Financial cooperatives are some of the largest providers of microfinance services to the poor.

• Financial cooperatives thus play a central role in the achievement of an inclusive financial sector that encompasses the poor.

Through their commitment to servicing the poor and underserved, financial cooperatives are helping to lessen the burden of poverty.  Financial cooperatives, by providing savings products, help to reduce members’ vulnerabilities to shocks such as medical emergencies.

Cooperatives have also been instrumental in promoting inclusive development in rural areas, helping to both strengthen and diversify rural economies. 

    Financial cooperatives provide access to credit for members who might not typically have access to the larger savings and commercial banks. This is significant in markets where financial providers are absent owing to poor revenue prospects, high risks, or high transaction costs. This access to financial services often supports the formation of small and micro businesses.

    Cooperatives have also been able to strengthen agricultural production and improve access of poor farmers, especially through engaging in fair trade arrangements. Small farmers who struggle to create and sustain businesses of their own are able to increase farm revenues, lower marketing and information-gathering costs, as well as enter into high-value supply chains that they would not be able to do on their own.

Conclusion• As governments around the world cut 

services and withdraw from regulating 

markets, cooperatives are being considered useful mechanisms to manage risk for members in agricultural or other similar cooperatives

• Strengthen the communities in which they operate 

• Cooperatives generally provide an economic boost to the community as well. 

       In an era when many people feel powerless to change their lives, cooperatives represent a strong, vibrant, and viable economic alternative.

• Cooperatives are specifically seen as significant tools for the creation of decent jobs and for the mobilization of resources for income generation.

• They contribute to sustainable human development and have an important role to play in combating social exclusion.

• Achieving economy of size, • Improving bargaining power when dealing with 

other businesses providing them, among others benefits, higher income and social protection 

• Purchasing in bulk to achieve lower prices, • Obtaining products or services otherwise 

unavailable• Access or broadening market opportunities• Improving product or service quality, • Securing credit from financial institutions • Increasing income• Regardless of the type, size, geographical location 

or purpose, cooperatives provide a unique tool for achieving one or more economic goals in an increasingly competitive global economy. 

The need to promote the business potential of cooperatives so they can contribute to sustainable development and decent employment, in the context of the urgent need for social justice. 

Empowering cooperatives to leverage their capacity to contribute to social justice requires a sound policy and legislative framework

How?

     Raise awareness of the cooperative enterprise model and its potential contributions to social development.

The sound governance of cooperatives depends upon a well-informed and active membership base, dedicated to cooperative values and principles. To sustain the drive of cooperatives for social justice, a strong membership base, bound by the democratic one-member-one-vote principle, is essential to addressing weak or unethical management, or other conflicts of interests which could divert cooperatives from addressing social justice issues.

To be effective it need to be comprised of nine principles. These nine principles are:

1. Need to have a multi-faceted and comprehensive strategy 2. Need to strengthen community ownership3. Need to secure access to credit for local businesses 4. Need to build human resources (leadership development,

literacy development, employment supports, etc.) 5. Need to build local capacity6. Need to integrate social and economic goals7. Need to empower a broad range of the community 8. Need to have sound financial management 9. The process needs to be guided by strategic planning and

analysis

Bruce (2000)

ICA Vision 2020These critical themes are:

1 Elevate participation within membership and governance to a new level

2 Position co-operatives as builders of sustainability

3 Build the co-operative message and secure the co-operative identity

4 Ensure supportive legal frameworks for co-operative growth

5 Secure reliable co-operative capital while guaranteeing member control

Performance Audit Report

• PESOS (Credit coop)• PISO (all)

Article 53 of R.A. 9520, otherwise known as the Philippine Cooperative Code of 2008, to wit:

“Every cooperative shall draw up regular reports of its program of activities, including those in pursuance of their socio-civic undertakings, showing their progress & achievements at the end of every fiscal year.

Governance and Audit Report for Cooperatives

• MEMORANDUM CIRCULAR NO. 2017-05Series of 2017

Governance and Management Audit Working Paper – refers to the working paper to be used by the Audit Committee or Internal Auditor in analyzing/assessing the performance of the cooperative in a form to be prescribed by the Authority.

Governance and Management Audit Report – refers to the summary report of analysis/assessment to be undertaken by the cooperative based on the result of the audit using the tool prescribed by the Authority

Section 8. Period of Submission and Sanctions

• The Governance and Management Audit Report (see Annex B – Sample Report) shall be submitted by the cooperative to the CDA not later than 120 days from the end of each Calendar Year as attachment to the CAPR.

• The cooperative who failed to submit the report shall not be issued Certificate of Compliance (COC) or may also be subjected to a procedural process of cancellation

Section 11. Effectivity• This Memorandum Circular shall take

effect upon approval of the CDA Board of Administrators and fifteen (15) days after its publication in the Office of National Administrative Register (ONAR).

Approved by the CDA Board of Administrators on August 15, 2017 per BOA Resolution No. 213 Series of 2017

By virtue of the principles of co-operatives, there is an integral relationship between a cooperative at its community. Often not, cooperatives are acknowledged as playing a role in community economic development, cooperatives are essentially a response to community development opportunities or challenges.

Cooperatives are already playing a strong role in the economies of local communities.

Reference

• https://uncoopsyear.wordpress.com/category/cooperatives-in-social-development/