To promote mutual advantages for its members, a cooperative society implies allocating funds. By the members and/or providing services, sharing the organization’s control, and returning benefits to members. Any surplus thus generated would then be either reinvested for the betterment of the cooperative society. Or shared among the members equally. According to the measure of their participation ,and not according to the size of their investment. Members believe in unity, fairness, and democracy. Which means every member has a voice in the organization without regard to their capital stake.
What is Cooperative Society?
Cooperative Societies are a voluntary association of people who come together to form an equitably owned and democratically controlled enterprise. While traditional businesses are set up for profit maximization to be shared among shareholders, cooperative societies are set up for the benefit of their members.
The societies run by the principle of democratic participation in terms of “one man-one vote,” regardless of the number of shares held. They save-in, share risks and profits, and join efforts for mutual welfare instead of individual profit.
Characteristics of Cooperative Society
A cooperative society is a voluntary association instituted to benefit its members economically. It is not opposed to democratic principles in which every member has a say in the affairs of the society; principles include equality, mutual assistance, and joint ownership. The primary spheres defining a cooperative society’s workings are transparency, limited return on capital, and service above profit.
Voluntary Membership
Membership is open to all individuals with a common interest; no one shall be discriminated against. Membership is voluntary, so allowing entry and exit into the cooperative could ensure that only genuinely interested members would actively participate. This open-door policy brings trustworthiness, inclusiveness, and diversity into the organization.
Democratic Control
Such an association adopts a decision-making process on “one person-one vote,” one of its underpinnings of an egalitarian democracy. In other words, however highly or little inclined one member is in or for the association, each would participate in decision-making through general assemblies where all voices count, regardless of the amount paid. The structure guarantees such governance’s openness, equity, and accountability.
Service Orientation
Anything considered to matter more to a cooperative than profit-making was something to which the cooperative offers services to its members: the entire conception that leads to service. Thus, this philosophy, which is mostly service-oriented in cooperatives, ensures loyalty among members while maximizing the social relevance of the cooperative. It is envisioned that improving the members’ economic and social standing would exclude no one.
Limited Return on Capital
Returns on members’ investments in cooperative societies are purposely limited to avoid capitalistic tendencies. Hence, corporations tend to reward their investors, while cooperatives remain primarily concerned with the service of their members. Profits are typically reinvested for the benefit of all, ensuring sustainability and growth.
Importance of Cooperative Society
Economic growth and improving the living standards of disadvantaged communities came through cooperatives in an organized and planned way. Additionally, cooperatives provide their members with affordable goods, capital, and services to improve the quality of their lives. Thursday’s empowerment of the people through collective ownership and collective decision-making in cooperatives enhances the local economy.
Bringing Equal Distributions of Income
Cooperatives share the wealth generated equitably among members, thereby minimizing social and economic disparities. With a focus on financial inclusion, it benefits the communities that mainstream businesses have historically underserved.
It Removes Exploitation
Cooperatives also assist their members in accessing goods and services at fair prices by eliminating intermediaries. The above means farmers, artisans, and small businesses receive higher returns for their efforts, hence becoming economically independent.
Fostering a Sense of Ownership
Members are owners and beneficiaries who actively engage in the management and improvement of the cooperative. The participation of members spurred on by ownership greatly enhances productivity.
Jobs Creation
The cooperatives create job opportunities within the local community, especially in rural areas with scarce employment opportunities. They are the engine for economic activities to help lower migration while promoting regional development.
Cooperation in the Welfare
The cooperatives invest money in other activities besides income-generating ones, such as education, healthcare, housing, and general welfare. They improve living conditions, community integrity, and social welfare significantly.
Role of Cooperative Societies
Generally, a cooperative society exists for the sole purpose of bringing the combined needs of its members to fruition in a manner that is most efficient and least expensive. Its services, whether through economic, social, or support activities, are meant to uplift the welfare of its members.
Market Facilitation for Goods
Cooperatives, which procure goods from producers and sell them to members, avoid the middleman by selling them directly at reduced prices. Bulk purchasing also ensures that they sell products cheaper, a benefit directly to their members.
Credit Provision
A credit cooperative lends members relatively more affordable interest rates than commercial banks. Thus, credit is made available even for poor farmers, artisans, and small entrepreneurs who would otherwise find it hard to obtain conventional credit.
Reciprocal Support
Cooperatives aggregate support to cover emergency financial needs and other assistance in times of crisis, such as accidents, illnesses, or natural disasters. Such forms of collective security will reinforce member solidarity and resilience.
Salvation spurs
Distribution and Propagation between Cooperative societies – Institutions that assist members in nurturing a culture of savings through such savings schemes where interests are paid at attractive rates and encourage financial discipline among their members. The accumulation of these savings will, over time, translate into economic security and investment ability.
Technical and Educational Assistance Provision
These cooperatives create conditions for members to boost their productivity and knowledge through training programs, workshops, and skill development sessions. Also, members are given the skills necessary to thrive economically and socially.
Benefits of Cooperative Societies
The cooperative society is a business organization operated by individuals for mutual purposes. Members contribute resources, whether capital, labor, or both, to manage operations in combination against economic goals common to all members. Beyond all that, the cooperative model manifests a vast array of benefits, most of which are financial, social, and democratic, that the traditional business structures would never be able to offer.
Lower Costs
Pooling resources will enable cooperatives to negotiate better deals and reduce their costs for members. It ensures that individuals and businesses have affordable and high-quality goods and services at competitive prices.
Profit Sharing
Surpluses generated by cooperatives are either reinvested or shared among members based on their participation, not investment. This fair distribution promotes collective success rather than rewarding only major shareholders.
Community Building
Such groups help create strong community ties based on trust and collaboration among their members. Networks against economic ties are built, providing support systems and contributing to social cohesion.
Improved Living Standards
Increasingly, it has offered affordable goods, services, education, and health care through which cooperatives uplift and raise the community and individual living standards. A community with strong cooperative societies tends to be more prosperous and stable.
Access to Financial Services
Cooperative banks and credit societies can make relevant financial services available to the underserved in most cases. Consequently, these societies fill the gaps left by conventional financial institutions for entrepreneurs and self-reliant people.
Democracy in Practice
The cooperative thereby practices some virtues of democratic governance such as transparency, accountability, and participatory decision-making. In this case, it prepares members for leadership and civic responsibility.
Types of Cooperative Societies
A cooperative society is a business owned and controlled by its members rather than for investors’ profit; it is a self-governing, voluntary association to meet mutual needs for a particular type of cooperative society. Cooperative societies cater to different needs of the community, hence specializing in a number of their forms.
- Consumer Cooperatives
They provide the much-needed goods to member-consumers at fair prices. They make members benefit from bulk purchasing and savings on production and administration costs.
- Producer Cooperatives
Producer cooperatives enable small producers to process, market, and sell their goods collectively. This increases bargaining power and ensures better profits by cutting out intermediaries.
- Cooperative Societies for Credit
Apart from loans at reasonable rates, credit societies facilitate savings deposits from the members, propelling their members to achieve financial independence. They serve as financial lifelines for agricultural producers, artisans, and micro-entrepreneurs.
- Housing Cooperatives
Housing cooperatives aim to provide affordable housing for their members by pooling their resources. It renders the elusive dream of homeownership to lower- and middle-income families.
- Marketing Cooperatives
Marketing cooperatives facilitate the properly selling of producers’ products at the best prices. They enhance market access and eliminate exploitative practices.
- Agricultural Cooperatives
Agricultural cooperatives provide farmers with crucial access to seeds, fertilizers, machinery, and markets. Through improved productivity and incomes, they strengthen rural economies.
Cooperative Society FAQs
1. What are the two limitations of a cooperative society?
Limited capital and slow decision-making due to democratic processes are two significant limitations of cooperative societies.
2. What is the purpose of a cooperative society?
The purpose is to promote mutual help and collective welfare by providing goods, services, or employment to its members at fair prices.
3. What are the 7 principles and practices of cooperative?
They include voluntary membership, democratic control, economic participation, autonomy, education, cooperation among cooperatives, and concern for community.
4. Who has more power in a cooperative housing society?
In a cooperative housing society, each member has one vote regardless of shareholding, ensuring democratic control without dominance.
5. Can a non-member benefit from a cooperative society?
Generally, benefits and services are restricted to members only, although some cooperatives allow limited access to non-members depending on their bylaws.
