Cooperatives: alternatives for those who need cash
By Lynda C. Corpuz
MoneySense
First Posted 09:59:00 01/28/2008
Strapped for cash? Banks offer various products for those who need cash – personal, home, business, or auto loans. There are also salary loans from the Government Service Insurance System and the Social Security System. But apart from banks or government institutions, cooperatives or “coops” are also alternatives for those who need cash.
Coops are duly registered organizations of persons with a common interest who voluntarily group together to make required equitable contributions, and accept a fair share or benefits and risks in its endeavors (under RA 6938 or the Cooperative Code of the Philippines). Through a coop, you pool finances and talents to build capital, produce goods, raise incomes, and tap loans at lower interest rates than borrowing from informal lenders or users.
Here are things to remember about joining—and borrowing money from a coop:
You join voluntarily. There are five kinds of coops: credit promotes thriftiness and creates funds to grant productivity loans; consumer procures for and distributes commodities to member and non-members; producer undertakes agricultural or industrial joint production; service engages in medical and/or dental care, hospitalization, transportation, insurance, housing, labor, electric and light power, communication, among other services; and multipurpose, combines two or more of the business activities of different coop types.
Your share is limited. As per coop principles reformulated in 1966 in Vienna, by the 23rd Congress of the International Cooperative Alliance, a member’s share is limited to prevent domination of the coop’s affairs by affluent members.
You share in the surplus or savings. The coop is designed to distribute surplus equally, again, so no member will gain at the expense of another. Surplus, upon agreement, are used to develop the coop’s business interest and provide common services to members. This will also help a coop avoid bad debts to stabilize its operations and assure its growth.
You can get training. It trains members to avoid lack of understanding of the principles, aims, and purposes of the coop; improper credit use (borrowers in rural areas are known to spend borrowed money for fiestas or luxuries). It also educates those who are interested in the principles and techniques of a coop.
You can get loans – and help an organization grow. A coop is touted to be founded for a noble purpose – even Jose Rizal, while exiled in Dapitan, established a community school and a coop store. Proponents of cooperatives hope to attract members with loans, as well as the mental and emotional rewards of supporting a helping organization’s existence or preventing its failure.
(This article is from MoneySense, the country’s first and only personal finance magazine. Visit www.moneysense.com.ph for more.)
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