In Compliance of Rule 7 of the IRR, RA 9520

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 CONTENT OVERVIEW
MODULE PAGE TOPIC

MODULE I:
FUNDAMENTALS OF
COOP THOUGHT &
3 ROCHDALE PIONEERS
PRACTICE
4 CO-OPERATIVE NATURE & PURPOSE

6 STATEMENT ON THE CO-OPERATIVE

IDENTITY

8 GROWING WITH MY COOP

A Real Life Story of a Successful Member

MODULE II: 10 CO-OPERATIVES AS A MOVEMENT

LEGAL FOUNDATION _________________________________________
OF COOPERATIVES
12 LEGAL FRAMEWORK OF CO-OPERATIVES

13 THE PHILIPPINE COOPERATIVE CODE OF

2008(Republic Act No. 9520)

22 IMPLEMENTING RULES & REGULATIONS (IRR)

(Republic Act No. 9520)

33 STRATEGIC & OPERATIONAL PLANS

MODULE III:
PLANS, PROGRAMS & 39 VISION, MISSION & GOALS
POLICIES OF THE
44-46 IMPORTANCE OF POLICIES
COOPERATIVE

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 ROCHDALE PIONEERS

Rochdale Society of Equitable Pioneers

• 28 flannel weavers
• Based in Rochdale, England
• 1844: founding of coop store marks the beginning of cooperatives as they are
known today
• Rochdale’s COOP Store
• £ 28 initial capital, raised after 4 months
• Initial inventory: butter, sugar, flour, oatmeal and a few candles
• Tea and tobacco were added later
• Soon became known for providing high quality, unadulterated goods
• Rochdale’s COOP Store
• After 10 years –
>1,000 consumers coops were formed throughout the UK
• By 1859: Rochdale had opened 6 branches

Growth & Development

• 1850 – set up a cooperative flour mill, together with 5 coops
• 1854 – Rochdale Cooperative Manufacturing Society, an industrial workers’ coop
• 1867 – the Cooperative Insurance Company
• Other coops organized:
- a burial society
- a cooperative building society
• 1863 – joined other consumers coops in forming the Cooperative Wholesale Society
(CWS), a central wholesale society
• 1873 – helped establish the Cooperative Union, the central educational and political
organization for cooperatives
• 1920 – start of consolidation & amalgamation of consumers cooperatives in the UK
• 1976 – Rochdale merged with Oldham Cooperative, became known as The Pioneers
• 1982 – became Norwest Pioneers after merger with other consumers coops
• 2007 – CWS merged w/ United Cooperatives, adopting the current name, The
Cooperative Group Limited.
• The Rochdale Pioneers inspired the development of coop movements in Europe, the
Americas, Asia and Africa.
• Clearly, co-operatives contributed significantly to the economic and social
development of advanced countries.

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 CO-OPERATIVENATURE & PURPOSE

READING: The “Co-operative Identity” (Page 6)

• 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-owned
and democratically-controlled enterprise.

Members are key to the success or failure of the co-operative.

Cooperatives fail when members have no sense of real ownership, and they see
themselves mainly as clients to be served.

Cooperatives fail when members are disinterested or feel alienated

• COOP PHILSOPHY
The core philosophy of the cooperative can be summed up this way:

1) HELP ONESELF thru the COOP and

2) Thru the COOP, HELP OTHERS.

This is the philosophy that every member, officer, manager and staff of the cooperative
should understand and take to heart.

• 10 CO-OPERATIVE VALUES & PRINCIPLES

1. SELF HELP This value encourages the cooperative to satisfy its own collective
needs and obligations through its own efforts. It is from this value that each
individual member shares the responsibility for the success of the cooperative.

2. SELF RESPONSIBILITY The individual person is obligated and encouraged by this

value to be responsible for her/his own well-being and to take responsibility for
any consequences that flow from whatever he/she does in pursuit of personal
need satisfaction.

3. DEMOCRACY is a philosophy of governance in which the people are collectively

the repository of authority. The exercise of that authority is democratically
legitimate only if the people who will be affected by that exercise are consulted
openly and freely.

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 4. EQUALITY as a value flows from the traditional wisdom that each person,
irrespective of talent, skill or appearance, possesses an intrinsic value and thus
as a human is of no greater or lesser value than anyone else. Each person is
intrinsically valuable, without the attachment of inferiority or superiority.

5. EQUITY as an end refers to fairness in the relationships between and among

individuals and the manner with which authority is exercised over persons.
Equity as a MEANS refers to the ownership of assets with which persons can
protect themselves against exploitation by others.

6. SOLIDARITY as a value refers to the respect and dignity with which the individual
people in a community relate to one another. It is a relationship that grows out
of each person seeing the other as valuable as the self.

7. HONESTY is an important prerequisite to continuing good relations among

persons and within cooperative. Honesty is the sine qua non for the individual
and the cooperative of individuals experiencing and benefiting from the truth.

8. OPENESS This value refers to the structured and reasonable availability to the
membership of information and knowledge relevant to the successful life of the
organization. The need to maintain transparency and strengthen information
dissemination is under this particular value.

9. SOCIAL RESPONSIBILITY refers to the cooperative’s acceptance of the

responsibility to work towards the betterment of society and towards the
amelioration of oppressive conditions in the society.

10. CARING FOR OTHERS This value refers to the obligation that each individual
cooperator, each cooperative and the cooperative movement as a whole must
act in such a way as not to cause harm or difficulty for others either of today,
tomorrow or of the distant future.

About the Co-op Principles

“They are subtly linked; when one is ignored, all are diminished. Co-operatives should
not be judged exclusively on the basis of any one principle; rather, they should be
evaluated on how well they adhere to the principles as an entirety.”
Dr.lan MacPherson

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 Statement on the Co-operative Identity

Definition

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-owned and
democratically-controlled enterprise.

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.

Principles

The co-operative principles are guidelines by which co-operatives put their values into practice.

1st Principle: Voluntary and Open Membership

Co-operatives 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.

2nd Principle: Democratic Member Control

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 also organized in a democratic
manner.

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 3rd Principle: Member Economic Participation

Members contribute equitably 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. Members 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 their 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.

4th Principle: Autonomy and Independence

Co-operatives are autonomous, self-help organizations controlled by their members. If they enter
to agreements with other organizations, including governments, or raise capital from external
sources, they do so on terms that ensure democratic control by their members and maintain their
co-operative autonomy.

5th Principle: Education, Training and Information

Co-operatives provide education and training for their members, elected representatives,
managers, and employees so 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.

6th Principle: Co-operation among Co-operatives

Co-operatives serve their members most effectively and strengthen the co-operative movement
by working together through local, national, regional and international structures.

7th Principle: Concern for Community

Co-operatives work for the sustainable development of their communities through policies
approved by their members.

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 GROWING WITH MY COOP
A Real Life Story of a Successful Member
FELIMON S. FUENTES was born in Bicol. He moved to Parañaque in 1976 in search of a
job armed with only a high school diploma. He was hired as a utility-driver at the Sucat
branch of Mercury Drug and retired in 2009. Felimon and wife Lilia are members of the
San Dionisio Credit Co-operative (SDCC). They are blessed with three daughters and
two sons, three of whom are also members of the co-operative.

Here is their story as told by Felimon Fuentes.

Part 1

“A friend of mine who is a member of SDCC encouraged me to join. I became a co-op

member in 1980 after attending the pre-membership seminar for three days. I wanted
to go into business to augment my small income from my job and support my family. I
knew that the co-operative could help me.

“I decided to go into the tricycle business because there was an opportunity in our
area. The cost of a brand-new tricycle at that time was P12,000. I got my first loan of
P5,000 from the co-operative based on my deposit. The rest of the amount I got as
salary loan from Mercury Drug. That’s how I got my first tricycle unit.

“I hired a driver who paid me daily ‘boundary’, which I deposited in the co-operative
every week. Every month, I would pay my installment due to the co-operative. Things
went well so much so that I was able to borrow another P6,000 after six months to buy
another [tricycle] unit. Again, with additional loan from Mercury Drug, I got my second
tricycle. This was how it progressed. Every six months I would borrow money to buy
another unit until such time that I was able to buy three units a year. I maintained a
clean record in the co-operative so I was able to borrow more and add more tricycle
units within a span of over twenty years.

“It was out of my income from this business that I was able to send my children to
school. Of course, I had to be thrifty. I saved as much as I can. It helped that my wife,
who is also a member of the co-operative, had a small sari-sari store. I studied our
expenses well and I learned to budget. I taught my children to be thrifty as well. With
the grace of God, my children are all professionals now: one is a medical doctor, one is
a lawyer, and the other two are computer engineers working in Makati. Three of my
children are now members of the co-operative. The youngest also wants to join.

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Part 2

“By the way, I saw to it that after two years when I recovered my investment in one
unit, I would transfer ownership of the tricycle to the driver. I must have acquired more
than one hundred units since I started this business, and I have transferred ownership
of 60 of these to the drivers. So I have helped many drivers acquire their own tricycles.
Right now I still have forty units under my name. Most of these will be owned by the
drivers eventually.

Part 3

“In the meantime, I have stopped borrowing from the co-operative for my business.
My family wants to buy the lots beside ours in the subdivision. I’d like my children to
have their own property and live near us. For this, we plan to get a loan from the co-
operative again.

“The co-operative has really been a blessing to us. I’ve been encouraging people I
know, especially those in our subdivision to join the co-operative. I tell them ‘You will
always have money when you are a member of the co-operative. You will be taught
how to earn a living. It will support you when you decide to go into business.’ There is
great value in being part of this organization.”

Reprinted from WILL TO SERVE: The Story of San Dionisio Credit Cooperative, pp 101 –
103.Written by Romulo M Villamin, June 2011.

QUESTIONS

1. What are the qualities that make Felimon Fuentes a good member?
2. Identify the important things he did that made him succeed as a member.

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 CO-OPERATIVES AS A MOVEMENT

Movement
• A group of people with a common ideology
• A social movement thrives because of a common cause.

UN resolution A/RES/64/136

• The United Nations proclaimed 2012 as the International Year of Co-operatives (IYC) on
18 December 2009.

“Co-operatives are a reminder to the international community that it is possible to

pursue both economic viability and social responsibility.” - Ban Ki-moon, UN Secretary
General

“India’s 100,000 diary co-ops collect 16.5 million liters of milk from 12 million farmer
members every day, making significant contribution to India’s food supply.”

“In New York, 27,000 homes abandoned by landlords have been renovated and taken
over by housing co-ops designed for low-income people.”

“In Brazil, the world’s biggest co-op medical system has 367 local member co-ops
operating in over 80% of Brazil’s counties, with 98,000 doctors in membership and
serving 12 million patients.”

“In 2001, workers from 200 failed enterprises in Argentina were taken over by the
workers to form workers co-operatives.”

“In Nicaragua, small-scale fishery co-ops accounted for 60% of fishery exports valued at
$40 million; 78% of maize & 59% of beans are marketed cooperatively.”

“In the UK, a co-operative operates 400 markets on behalf of 65 co-operative market
societies, through which 12,000 producers can sell directly to consumers.”

Large segments of the population are members of co-operatives

• Argentina: 23% of population • Japan: 91% of farmers
• Bolivia: 33% of population • New Zealand: 40% of population
• Quebec: 70% of population • Malaysia: 27% of population
• Finland: 62% of households • Singapore: 50% of population
• France: 75% of agricultural
producers

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Co-operatives are significant economic actors in national economies
• Bolivia: 25% of savings market
• Colombia: 91% of microcredit
• Kenya: 95% of cotton, 76% of dairy market
• Korea: 71% of fishery market
• Kuwait: 70% of retail trade
• Mauritius: 60% of food crops
• Norway: 96% of milk, 70% of egg products
• Poland: 75% of dairy production
• Côte d'Ivoire: co-ops build schools, rural roads, clinics

It is important to remember that…

• … the co-operatives in these countries achieved success not because they acted alone;
• … rather they succeeded because they acted together as a movement
• The United Nations estimated in 1994 that the livelihood of nearly 3 billion people, or
half of the world’s population, was made secure by co-operative enterprise.
• Co-operatives create and maintain employment

Where is the Philippines in the Co-operative map?

• Reasons why Phil Cooperatives are not in the Co-operative Map

• Co-ops are multiplying rather than consolidating
• Co-ops are growing individually rather than as a system
• A Broken System
• About 78% of the more than 18,000 co-ops all over the country are into financial
services
• No market presence
• Following rather than innovating
• Only 2% of coops are classified as producers
• Only 3% of coops are into agricultural marketing

What’s our contribution to agricultural development?

• 2 Significant Risks
• Co-operatives are not growing as a system.
• Co-operatives are losing their social relevance.

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 LEGAL FRAMEWORK OF CO-OPERATIVES

• The Philippine Cooperative Code of 2008

• The International Co-operative Alliance is the global body representing all co-
operatives around the world.

It safeguards the universally accepted Co-operative Values and Principles.

• July 28, 2008 Declaration of The Philippine Cooperative Code of 2008 or RA 9520

• IRR is Pursuant to Art 139 of RA 9520

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 THE PHILIPPINE COOPERATIVE CODE OF 2008
(Republic Act No. 9520)

Salient Features

General Concept
A cooperative is an autonomous and duly registered association of persons, with a common
bond of interest, who have voluntarily joined together to achieve their social, economic and
cultural needs and aspirations by making equitable contributions to the capital required,
patronizing their products and services and accepting a fair share of the risks and benefits of
the undertaking in accordance with the universally accepted cooperative principles

Universally Accepted Cooperative Principles

- Voluntary and Open Membership
- Democratic Member Control
- Member Economic Participation
- Autonomy and Independence
- Education, Training and Information
- Cooperation Among Cooperatives
- Concern for Community

Definition of Terms

Representative Assembly
The full membership of a body of representatives elected by each of the sectors,
chapters or districts of the cooperative duly assembled for the purpose of exercising
such powers lawfully delegated unto them by the general assembly in accordance with
its by-laws

Officers of the Cooperative

- Members of the board of directors
- Members of the committees created by the general assembly
- General manager or chief executive officer
- Secretary
- Treasurer
- Other positions as the by-laws provide

Social Audit
A procedure to assess the social impact and ethical performance of cooperatives vis-à-
vis their vision, mission, goals and code of social responsibility

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Performance Audit
The audit on the efficiency and effectiveness of a cooperative as a whole, its
management and officers, and its various responsibility centers as basis for improving
individual or overall performance

Subsidiary Cooperative
Requisites:
 A cooperative;
 All or majority of members come from a (parent) cooperative,
 organized for any purpose different from the (parent) cooperative;
 receives technical, managerial and financial assistance from (parent) cooperative
Federation of Cooperatives
May be organized by three or more primary cooperatives doing the same line of
business, organized at the municipal, provincial, city special metropolitan political
subdivision or economic zone

Economic Survey
- Upon formation and organization of a proposed cooperative, it shall have a
bookkeeper
- May not be allowed to operate without the necessary personnel

Organization
- Pre-Membership Education Seminar is now mandatory
- Paid-up capital should not be less than P15,000
- Must register as a single-purpose cooperative
- May apply as multi-purpose coop (MPC) only after 2 years and when the requirements
for MPC are met
- Must identify a reasonable and realistic capital build-up program

Training Requirements
- Board members, committee members and other officers are required to attend
mandatory training
- Non-attendance of the required trainings may be a ground for disqualification of such
officer from office

Eligibility of Government Officers & Employees

- CDA officers/employees not eligible for election or appointment
- Elective officials (except party-list representatives) of the government not eligible to
become officers and directors

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Quorum
For all coops (except electric):
- At least 25% of members entitled to vote
For electric coops:
- 5% of members entitled to vote, unless by-laws provides otherwise

Term of Office of Board of Directors

- Maximum of two years for every term
- Prohibition on 3 consecutive term election now lifted, unless the coop’s by-laws
provides otherwise

Prohibition as Appointive Officers of the Cooperative

- 2 or more persons related up to 3rd civil degree of consanguinity or affinity
- Person who is engaged in business similar to that of the coop
- Person who has interest in conflict with the cooperative in any manner.

Committees

- Elective Committees:
- Audit
- Election

- Appointive Committees:
- Ethics
- Conciliation-mediation
- Others

Typical Structure of a Coop, Functions, Responsibilities, Training Requirements of Directors,

Officers & Committee Members
- Mandates CDA to issue rules and regulations on the following:
- Functions
- Responsibilities
- Training requirements

Call for General Assembly

- Majority vote of board of directors
- 10% of members entitled to vote
- CDA upon petition of 10% of members entitled to vote
- CDA (to report to members the result of examination or investigation of cooperative
affairs)

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Compensation
- Only reasonable per diems may be given to directors when the by-laws does not
provide compensation
- Directors and officers are not entitled to per diem when:
- The coop incurred net loss in preceding year;
- The coop had a dividend rate less than the official inflation rate for the same year
- Any compensation other than per diem may only be given to directors when it is
approved by a majority vote of members with voting rights at a regular or special
assembly.

Removal of Elective Officer

- Complaint may be filed with the board of directors
- May be placed under preventive suspension
- Shall be accorded due process
- Board may recommend the removal upon finding of prima facie evidence
- Elective officer may be removed by three-fourths (3/4) votes of regular members
present and constituting a quorum

Address
- Coop must have official postal address
- Such address and every change thereof must be registered with CDA

Inspection of books
- Coop members and CDA representatives may inspect during reasonable hours at
official address the following:
- Copy of RA 9520 and all laws pertaining to coop
- Copy of CDA issuances
- Copy of articles/bylaws
- Register of members
- Books of minutes (GA, BOD, committee meetings)
- Share books
- Financial statements
- Other documents required to be maintained
- Audit committee must continuously and periodically review the books and records of
accounts
- Financial statements to be published annually and to be posted at conspicuous place in
the principal office of the coop
- Records or documents pertaining to financial an non-financial operations may be
disposed of after 5 years, except:
- Records or documents subject of civil, criminal and administrative proceedings

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Submission of Reports
- Reports to be submitted to CDA within 120 days from end of calendar year
- Administrative fines and penalty may be imposed by CDA on accountable officers in
case of failure to file reports within the set period
- Failure to file may be ground for the revocation of authority of the cooperative to
operate as such.

Bonding of Accountable Officers

- Directors, officers and employees holding funds, securities and property on behalf of
coops shall be bonded adequately as determined by the board of directors
- Bonds to be renewed every year
- Coops to inform CDA of the bond renewal every year

Tax Classification of Cooperatives

- For coops transacting business with members only:
* Not subject to any taxes and fees imposed under internal revenue laws
and other tax laws

Tax Treatment of Cooperatives

- For coops transacting business with members and non-members:
* Not subject to any tax on their transactions with the members;
* Members’ transaction with the coop is not subject to any taxes and fees,
including final taxes on members’ deposits and documentary tax
- For coops transacting business with members and non-members and with NOT MORE
THAN 10 million accumulated reserves and undivided net savings:
* Exempt from all national, city, provincial, municipal or barangay taxes;
* Exempt from customs duties, advance sales, compensating taxes on importation
of machineries, equipment and spare parts for use in coop business operation and
which are not available locally as certified by DTI
- For coops transacting business with members and non-members and with MORE
THAN 10 million accumulated reserves and undivided net savings:
* Must pay income tax on the amount allocated for interest on capital: Provided,
The same tax is not consequently imposed on interest individually received by
members: Provided further, That cooperatives, regardless of classification, are
exempt from income tax from the date of registration with the Authority.

- For coops transacting business with members and non-members and with MORE THAN
10 million accumulated reserves and undivided net savings:
* Must pay the value-added tax on transactions with non- members, except those
coops covered by Sec. 109 (L),(M), (N), RA 9337;
* Must pay other taxes unless otherwise specified in the Coop Code;

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 * Must pay tax on donations to charitable, research and educational institutions
(although reinvestment to socio-economic projects within the area of operations may
be tax deductible)
- VAT exemption under Sec. 109, RA 9337:
* Sales by agricultural cooperatives registered with CDA;
* Gross receipts from lending activities by credit or multi-purpose coops registered
with CDA;
* Sales by non-agricultural, non-electric and non-credit coops registered with CDA:
Provided, the share capital contribution of each member does not exceed
P15,000 and regardless of aggregate capital and net surplus ratably distributed
among members
- All coops, regardless of accumulated reserves and undivided net savings:
* Exempt from payment of local taxes;
* Exempt from taxes on transactions with banks and insurance companies;
* Sales or services rendered for non-members subject to applicable percentage
taxes, except sales made by producers, marketing or service coops;
* Internal revenue officers of BIR may examine the books of accounts only after
previous authorization by the(CDA)

Other non-fiscal incentives

- Free of charge on notarial services by the court, where there is no available notary public, on
loan instruments not exceeding P500,000
- Exempt from payment of court and sheriff fees
- Exempt from bonding requirement for bringing an appeal against any decision on an inferior
court
- Exempt from Securities Law when a coop issues a non-speculative security.

Involuntary Dissolution
- may be dissolved by order of competent court
- may be dissolved on the ground of:
- violation of any law, regulation or provisions of its by-laws; or
- insolvency

Dissolution by Order of CDA

- having obtained its registration by fraud
- existing for an illegal purpose
- willful violation, despite notice by Authority, of the provisions of this Code or its by-laws
- willful failure to operate on a cooperative basis
- failure to meet the required minimum number of members in the cooperative

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Share Capital Holdings of Members
- limited to not more than 10 percent of the share capital
- heirs are entitled to the shares of decedent
- member-heirs shares not to exceed 10%
- non-member-heirs are subject to membership qualifications
- excess shares revert to coop upon payment to the heir of the value of such
excess shares

Requirements for Assignment of Share Capital

- the member has held such share capital contribution or interest for not less than 1 year
- the assignment is made to:
- cooperative; or
- member of the cooperative
- person within the field of membership
- the board of directors has approved such assignment

Revolving Capital
- board may raise a revolving capital by deferring the payment of interest on share capital and
patronage refund
- authorized deduction from products sold or services rendered or per unit of services or
product handled
- revolving capital certificate with serial number, name, amount and rate of interest and time
of retirement to be indicated

Right to Examine
- a member has right to examine coop records within reasonable hours during
business days
- any officer who refuses to allow a member to examine may be punished under Article 140
- the exercise of this right must be for legitimate purpose and in good faith

Financial Auditor
- Independent from the cooperative or its subsidiary;
- A member in good standing of PICPA and accredited by PRC-BOA and the CDA
- Audit in accordance with generally-accepted auditing standards for cooperatives (joint
promulgation by PICPA and CDA)
- Submit audit report to the board of directors and audit committee

Allocation of Net Surplus

- 50% for General Reserve Fund for 1st 5 years, (at least 10% on 6th year and thereafter)
- Not more than 10% for coop education & training fund (CETF) where ½ shall be spent by coop
for education & training, while the other ½ may be remitted to a union or federation

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Allocation of Net Surplus
- Not less than 3% for community development fund
- Not more than 7% for optional fund, or land and building or any other fund which the coop
identified in its by-laws
- Remaining portion of net surplus to be made available to members in the form of interest on
capital & patronage refund (at least 25%)

Settlement of Coop Disputes

- Mediated at the level of primary coop level
- If not resolved at primary coop level, then mediated at the federation or union
- If not resolved at federation/union level, then submitted to CDA for arbitration
- If not satisfied by arbitral decision, then decision may be appealed at the Office of the
President

Penalty Provisions
- Unauthorized use of the word “cooperative” punishable by imprisonment of 2-5 years and fine
of 20,000
- Attempting to evade or defeat tax in violation of Art. 60 and 61 of RA 9520, punishable by
imprisonment of 2-4 years and fine of 30,000 – 100,000
- Direct or indirect violation of Art. 60 and 61 by any public official or employee,
punishable by imprisonment of 1-5 years and fine of 5,000
- Violation of Arts. 45 (Liability), 48 (Disloyalty), 49 Illegal Use of Confidential Info) by director,
officer or committee member, punishable by imprisonment of 5-10 years and fine of 5,000 –
500,000
- Direct or indirect interference or intervention by:
* influencing the election or appointment of directors, officers, committee members, thru
endorsement or campaign;
* Requiring prior clearance for any policy or decision in a coop;
* Requesting or demanding for creation of positions or recommending
appointment, transfer or removal of a person from his position;
* committing acts inimical or adverse to the autonomy and independence of coops.
- Offenses punishable by imprisonment of 1-5 years and fine of 50,000:
* Omission or refusal to furnish any report or information required under the Code;
* Providing CDA any false or misleading information, report or other documents required
under the Code;
* Omission or refusal to keep a book or register required under the Code or make the
required entry therein
- Offenses punishable by imprisonment of 1-5 years and fine of 50,000:
* Making a false or misleading entry required under the Code in a book or register;
* Hindering an authorized person from making an inspection, audit, examination or
investigation under this Code;

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 * Failure to comply with an order or written instructions issued or given by the Authority
(CDA);
- Offenses punishable by imprisonment of 1-5 years and fine of 50,000:
* Violation of provisions regarding transactions with a restricted party;
* abetting, counseling, allowing, authorizing or commanding another person to commit an
offense punishable by the Code (when the offender is a cooperative, penalty is imposed
on its directors and officers)

General Penalty
Any violation under the Code where no penalty is specified is punishable by
imprisonment of 6 months to 1 year and fine of 1,000.

Repealed or Modified Laws and Rules

- Sections 3, 5, and 7 of PD 1645 (electric coops);
- EO 623 (electric coops);
- Revenue Regulations 20-2001 (BIR);
- laws, decrees, executive orders, IRRs, BIR circulars, memorandum orders, letters of
instruction, local government ordinances that are inconsistent with the Code.

Registration of Existing Coops

Existing coops are deemed registered under the new law upon submission of:
- certificate of registration/confirmation;
- articles of cooperation;
- by-laws;
- latest audited financial statements
- Failure to submit the requirements within one year from effectivity of the
new law (or until March 22, 2010) deems the coop cancelled motuproprio

Transitory Provision
- After issuance of a new certificate of registration, the coops must secure a certificate of tax
exemption from BIR which shall be valid for 5 years;
- All unpaid assessments of existing coops shall be placed under compromise settlement on
terms favorable to the coops;
- BIR and CDA to issue joint regulations on the exemption and compromise within 90 days

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 IMPLEMENTING RULES & REGULATIONS (IRR)
(Republic Act No. 9520)

Salient Features

RULE 1 – REPRESENTATIVE ASSEMBLY

“Representative Assembly shall refer to the full membership of the body of representative
elected by each of the sector, chapter, or district of the cooperative duly assembled for the
purpose of exercising such powers lawfully delegated unto them by the general assembly in
accordance with its by-laws”

Sec. 3. Division of Cooperative into Sector, Chapter, or District. The number of the members of
the cooperative, which shall be at least One Thousand (1,000), and the geographical location,
scope of operation, cluster, work shift, or other similar conditions shall be the basis in dividing
the cooperative into sector, chapter, or district.

Sec. 5. Quorum Requirement for Sector, Chapter, or District. At least twenty five per centum
(25%) of the members entitled to vote in each sector, chapter, or district shall constitute a
quorum.

Sec. 6. Number of Sector, Chapter, or District Representative. The number of sector, chapter,
or district Representative or Delegate to be elected shall be provided in the By-laws but in no
case, shall be less than ten percent (10%) of the total number of the regular members entitled
to vote of the sector, chapter, or district.

Sec. 9. Powers, Functions, and Responsibilities of the Representative or Delegate. The

Representative or Delegate shall have the following powers, functions , and responsibilities:
(1) To represent the sector, chapter, or district in the Representative Assembly
Meeting;
(2) To decide for and in behalf of the sector, chapter, or district he/she represents in
the Representative Assembly Meeting; and
(3) To inform his/her sector, chapter, or district of what transpired during the
Representative Assembly Meeting.

RULE 2 – SUBSIDIARY COOPERATIVE

“Subsidiary Cooperative refers to any organization all or majority of whose membership or
shareholders come from a cooperative, organized for any other purpose different from that of,
and receives technical, managerial and financial assistance from, a cooperative, in accordance
with the rules and regulations of the Authority.”

Sec. 2. General Requirements. A parent cooperative may organize a subsidiary cooperative

provided that:

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1. It has been in operation for at least two (2) years and has incurred no losses for the last two
(2) preceding years of operation.
2. It has a net worth of at least Ten Million Pesos (Php 10,000,000.00) as shown in its latest
Audited Financial Statements.
3. All or majority of the members of the Parent Cooperative are willing to become members of
the Subsidiary Cooperative.
4. The business of the Subsidiary Cooperative shall be different from that of the Parent
Cooperative.
5. The creation of a Subsidiary Cooperative and the technical, managerial and financial
assistance to be provided shall be approved by at least three-fourths (3/4) vote of
members of Parent Cooperative with voting rights present and constituting a quorum in a
regular or special general assembly/ representative assembly meeting called for the
purpose.

Sec. 4. Conditions. The following conditions shall be considered in the registration and
operation of Subsidiary Cooperative:
1. Only assistance in the form of technical, managerial and financial assistance shall be
provided by the Parent Cooperative to its Subsidiary Cooperative;
2. Directors or Officers of the Parent Cooperative cannot be elected or appointed as Officers of
the Subsidiary Cooperative. However, the Parent Cooperative through its General Assembly
may appoint its Representative to act as Ex-Officio member of the Board of Directors of the
Subsidiary Cooperative;
3. The Management Staff of the Parent Cooperative cannot be at the same time the
Management Staff of the Subsidiary Cooperative;
4. Transfer of shares of members and other related interests from Parent Cooperative to
Subsidiary Cooperative and vice versa are prohibited; and
5. In case of dissolution of the Parent Cooperative, the Subsidiary Cooperative cannot be a
recipient of any grant, donations or other interests from the Parent Cooperative and vice
versa.

Sec. 6. Assistance from Parent Cooperative. The financial assistance to be provided shall not
exceed ten (10%) of the net worth of the Parent Cooperative. The technical and managerial
assistance shall depend upon the needs of the Subsidiary Cooperative and capacity of the
Parent Cooperative, which shall be taken up in the book at actual cost.

RULE 3 – MULTI-PURPOSE COOPERATIVE

“Any newly organized primary cooperative may be registered as multi-purpose cooperative only
after compliance with the minimum requirements for multi-purpose cooperatives to be set by
the Authority. A single-purpose cooperative may transform into a multi-purpose or may create
subsidiaries only after at least two (2) years of operation.”

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Sec. 2. Coverage. This Rule shall cover (a) all types of newly organized primary cooperatives
with combined two (2) or more business activities of different types of cooperatives as provided
for in Art. 23 of the Code, (b) a single-purpose cooperative desiring to transform itself into a
multi-purpose cooperative after at least two (2) years of operation.

Sec. 3. Minimum Capitalization Requirements. Only those cooperative with a minimum paid-
up capital of One Hundred Thousand Pesos (P 100,000.00) or as required in the feasibility study
whichever is higher shall qualify to register as a multi-purpose cooperative or can transform
into a multi-purpose cooperative.

RULE 4 – DIVISION OF COOPERATIVES

“Any registered cooperative, may by a resolution approved by a vote of three-fourths (3/4) of
all the members with voting rights, present and constituting a quorum, resolve to divide itself
into two (2) or more cooperatives. The procedure for such division shall be prescribed in the
regulations of the Authority. The new cooperatives shall become legally established upon
registration with the Authority: Provided, That all the requirements set forth in this Code have
been complied with by the new cooperatives: Provided, further, That no division of cooperative
in fraud of creditors shall be valid.”
Sec. 4.Preference of Members. Upon approval by the General/Representative Assembly in the
meeting called for the purpose, members of the original cooperative shall be allowed within
two (2) weeks to choose the new cooperative they prefer to join. The management of the
original cooperative shall then transfer the member’s share and all other interests to his/her
chosen cooperative.

Sec. 5.Presentation and Approval of the Plan of Division. The Board of Directors shall call a
General/Representative Assembly meeting to act on such Plan of Division with notice to all
members of record and Creditors at least thirty (30) days prior to the scheduled meeting. The
Plan of Division shall be approved by a vote of three-fourths (3/4) of all members with voting
rights, present and constituting a quorum in such general/representative assembly meeting.

Sec. 6.Right of a Dissenting Member. A dissenting member shall be entitled to a refund of

his/her share capital and all other interests under Art. 30 of the Code.

Sec. 9.Objection by a Third Party. Within fifteen (15) days from the day of posting or from the
last day of publication, a party may file an objection or opposition to the Plan of Division before
the Authority, copy furnished the cooperative concerned, which shall be decided within sixty
(60) days from receipt of the objection or opposition. If the objection or opposition is
meritorious, in order not to prejudice the interest of the third party, the Authority shall cause
the deferment or disapproval of the registration of the new cooperatives.

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 RULE 5 – GUIDELINES GOVERNING THE PROCEDURE FORMERGER OR CONSOLIDATION
Two (2) or more cooperatives may merge into a single cooperative, which shall be either
one of the constituent cooperatives or the consolidated cooperatives… No merger or
consolidation shall be valid unless approved by three-fourths (3/4) vote of all members with
voting rights, present and constituting a quorum of each of the constituent cooperatives at
separate general assembly meetings. The dissenting members shall have the right to exercise
their right to withdraw their membership pursuant to Article 30.

Sec. 2.Parties to the Merger or Consolidation. Only cooperatives belonging to the same
category can be parties to Merger or Consolidation. A primary cooperative can only merge or
consolidate with a primary cooperative, a secondary with a secondary cooperative, and a
tertiary with a tertiary cooperative.

Sec. 5.Proposal of Merger or Consolidation. The Proposal to Merge or Consolidate may be

made by the Board of Directors or by at least ten percent (10%) of the members with voting
rights. It shall be approved by at least majority of the members of each of the constituent
cooperatives with voting rights, present and constituting a quorum in separate
general/representative assembly meetings called for the purpose.

During the same meeting, the General/Representative Assembly shall appoint or elect the
representatives to the joint committee to draft the Plan of Merger or Consolidation.

Sec. 6.Approval of the Plan of Merger or Consolidation. The Plan of Merger or Consolidation
jointly prepared by representatives from the constituent cooperatives shall be submitted for
approval to the members of each constituent cooperative at separate general/representative
assembly meetings duly called for the purpose. Notice of such meeting shall be given to all
members of the respective cooperative, served either personally, or by registered mail with
return card or electronic means within the period as indicated in their By-laws.

The affirmative vote of members representing at least three-fourths (3/4) of all

members with voting rights, present and constituting a quorum of each of the constituent
cooperatives at separate general/representative assembly meetings shall be necessary for the
approval of the Plan of Merger or Consolidation, or amendments thereto, if any.

Sec. 10.Objection/s by a Third Party. Within fifteen (15) days after the date of posting or from
the last day of publication, a third party may file an objection or opposition to the Plan of
Merger or Consolidation before the Authority which shall be decided within sixty (60) days from
receipt of the objection or opposition. Finding the objection or opposition meritorious, in order
not to prejudice the interest of the third party, the Authority will cause the deferment or
disapproval of the registration of the Merger or Consolidation.

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 RULE 6 – GUIDELINES FOR LABORATORY COOPERATIVES
“Art. 26. Kinds of Membership. - A cooperative organized by minors shall be considered a
laboratory cooperative and must be affiliated with a registered cooperative. A laboratory
cooperative shall be governed by special guidelines to be promulgated by the Authority.

Sec. 2.Organization of Laboratory Cooperative. Fifteen (15) or more minors who are Filipino
citizens, actually residing in the community or enrolled in an educational institution within or
near the area of operation of the Guardian Cooperative or out of school minor actually residing
in the community, may organize a Laboratory Cooperative composed of minors, which shall be
seven (7) years old but below eighteen (18) years of age.

Sec. 6.Capitalization Requirements. The Laboratory Cooperative shall include in its By-laws a
program on continuous Capital Build-Up.

RULE 7 - FUNCTIONS, RESPONSIBILITIES AND TRAINING REQUIREMENTS OFDIRECTORS,

OFFICERS AND COMMITTEE MEMBERS

Sec. 5.Training Requirements for the Officers of the Cooperative. Officers of the cooperative
shall be required to undergo necessary training conducted by cooperatives, Federations and/or
other trainers or training institutions duly accredited by the Authority. The training program
should contain the minimum requirements in the module/curriculum as prescribed by the
Authority. The initial courses or any equivalent substitute thereof must be undertaken.
Basic Cooperative Course Cooperative Standards
Cooperative Management and Governance. Investment & Banking Procedures
Policy Development Financial Management
Conflict Management Internal Control
Parliamentary Procedure Rules Formulation
Leadership and Values Re-orientation Human Resource Management
Strategic Planning Entrepreneurial & Business Management
Records Management Basic Computer Course
Basic Accounting for Non-Accountants

Sec. 6.Compliance.The training is required for all cooperative officers. In cases where the
incumbent has not undergone the required training program, he/she shall undergo such
training within twelve (12) months from the effectivity of this Rule. Non-compliance with the
required trainings shall be considered grounds for disqualification for future election or
appointment until such time that he/she has complied with all the trainings required for the
position.

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Sec. 7. Duration of Trainings Attended. All trainings attended by cooperative officers shall be
considered valid compliance with the intent of this Rule for a period of five (5) years from
date of issuance of the Certificate of Training. After which, they shall be required to undergo
re-training of the same.

Sec. 8.Transitory Period. All cooperatives are hereby given two (2) years from the effectivity
of this Rule to comply with the Training Requirements as provided above.

RULE 8 – REPORTS REQUIRED FOR COOPERATIVE

Sec. 2.Required Regular Reports. The following reports shall be submitted to the Authority:
1. Cooperative Annual Performance Report (CAPR);
2. Social Audit Report including its program of activities in pursuance of its socio-civic
undertakings showing its achievements at the end of every fiscal year ;
3. Performance Report ;
4. Audited Financial Statements duly stamped “ Received “ by BIR; and
5. List of Officers and Trainings Undertaken/Completed.

Sec. 3.Additional Reports for Federations and Unions. Federations and Unions shall submit to
the Authority the following additional reports:
1. List of cooperatives which have remitted their respective Cooperative Education
and Training Funds (CETF);
2. Business consultancy assistance to include the nature and cost; and
3. Other training activities undertaken specifying therein the nature, participants, and
cost of each activity.

Sec. 7. Sanction For Delayed Submission. Failure to file the required reports on time shall
subject the Accountable Officer to pay a fine of Php100.00 per report per day of delay.

RULE 9 – GUIDELINES FOR THE LIQUIDATION OF COOPERATIVES

Sec. 3.Mode of Liquidation. The manner of liquidation or winding up may be provided for in
the cooperative By-laws and this would prevail unless it is inconsistent with law. In this
jurisdiction, the cooperative may avail of the following modes of liquidation:

(1) Liquidation by cooperative itself through a Board of Liquidators. The members of

cooperative entitled to vote shall elect from among themselves their Board of
Liquidators; and /or
(2) By conveying all the cooperative assets to Trustee or Trustees who will take charge of
liquidation.

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Sec. 5.Board of Liquidators/Trustees.
Within sixty (60) days from receipt of the Order of Dissolution from the Authority or
competent Court, the Board of Directors shall select/constitute the Board of
Liquidators/Trustees. In the event the Board of Directors fails or refuses to constitute the Board
of Liquidators/Trustees, at least twenty five percent (25%) of the members entitled to vote shall
convene and select/appoint the Liquidators/Trustees. In case the Board of Directors and the
General/Representative Assembly fail to select the Board of Liquidators/Trustees, the Authority
shall appoint the same.
The Board of Liquidators/Trustees shall not be less than three (3) but not more than five
(5) members. They shall take their oath of office before the Authority prior to assumption of
their functions and responsibilities.

Sec. 6.Functions, Powers and Obligations of the Board of Liquidators/Trustees. The Board of
Liquidators/Trustees shall:
1. Make an inventory of all assets and to determine all liabilities including Share Capital
holdings;
2. Preserve the existing assets of the cooperative;
3. Convert all assets of the cooperative into cash;
4. Pay the outstanding obligations including any and all valid claims against the
cooperative;
5. Distribute remaining assets pursuant to the provisions of the Code and this Rule; and
6. Make a final report on the liquidation and submit the same to the Authority.

RULE 10 – CAPITALIZATION AND ACCOUNTING PROCEDURES OF COOPERATIVES

Sec. 2. Capital Sources. Capitalization of a duly registered cooperative may be derived from any
or all of the following sources:
1. Members’ 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
4. Subsidies, donations, legacies, grants, aids and such other assistance from any local
or foreign institution whether public or private; Provided, That capital coming from
such subsidies, donations, legacies, grants, aids and other assistance shall not be
divided into individual share capital holdings at any time but shall instead form part
of the donated capital or fund of the cooperative

Sec. 3. Share Capital. The Share Capital of a cooperative, the par value of which may be fixed at
any figure not more than One Thousand Pesos (P 1,000.00), may consist of common share
capital and preferred share capital if the latter is provided for under the cooperative’s Articles
of Cooperation and By-laws. The share capital contribution of the members shall be considered
as equity. Provided, that it shall not be withdrawn and should not be used in offsetting
obligations whether past due or current while the membership subsists.

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(a) Common Share Capital shall be issued only to regular members. Its holders shall be entitled
to vote and be voted upon under the principle of one-man, one-vote principle, and shall
receive interest, the rate of which should not exceed the normal rate of return on
investment.
(b) Preferred Share Capital may be issued to regular and associate members. However,
Associate Members shall not be eligible to vote nor be voted upon on account of such
shareholdings but shall be entitled to, among others the following:
1. Preference in the payment of interest as provided for in the By-laws of the cooperative;
and
2. In case of liquidation, priority in the distribution of the net assets of the cooperative.

Sec. 4.Preferred Shares. Issuance and limitation on Preferred Share Capital shall be prescribed
in the By-laws of the cooperative. .

Sec. 9.Interest on Share Capital. Interest on Share Capital shall not exceed the Rate of Return
on Investment... Unless otherwise provided for in the By-laws of the cooperative, share capital
shall earn interest; the Rate of Interest shall be computed as follows:

Rate of Interest = X (Net Surplus less Statutory Reserves

Total Average Share Month

Where: X shall be a percentage to be determined by the Board of Directors allocated for

interest on share capital.

No allocation of interest on share capital shall be made without the approval of the
Board of Directors which may increase or decrease any or both.

Sec. 11.Patronage Refund. The principle of Patronage Refund is a principle of equity wherein an
equal right of members to participate in the organization and to equitably share in the benefits
accruing is established. Under the principle, the Net Surplus shall not be construed as profit, but
as excess payments made by them from the cooperative and which shall be deemed to have
been returned to them if the same is distributed as prescribed by the Code and by this Rule.

Provided, however, That the amount allocated for patronage refund shall not be less
than thirty percent (30%) of the net surplus after deducting the statutory reserves based on the
principle of equity. Provided, further, That in no case shall the rate of patronage refund be
more than twice the rate of interest on share capital

RULE 11 – SOCIAL AUDIT OF COOPERATIVES

Sec. 3.Social Audit. It is a procedure where the cooperative assesses its social impact and
ethical performance vis-à-vis its stated mission, vision, goals and code of social responsibility. It
is a process to assess the cooperative’s contribution for the upliftment of the status not only to

P a g e | 29
its members’ economic needs but also social needs and the community where it operates. The
cooperative’s actual performance and accomplishment are compared to 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.

Sec. 5.Components and Social Audit Indicators. The Social Audit of the cooperatives shall
consist of but not limited to the following major components/categories with its objectives:
1. Membership. To determine the effectiveness of the cooperative in meeting the needs
of its members vis-à-vis the socio-economic upliftment and empowerment of the
members.
2. Assets building. To determine the cooperatives’ performance in building up its
economic capacity to respond to its social responsibility and develop income generating
undertakings for its members.
3. Community Involvement and Solidarity. To determine the degree of community, social,
environmental involvement and solidarity of the cooperative. In relation to this, all
cooperatives are encouraged to promote environmental awareness and instill
environmental protection and conservation to their members and the community
where they operate, and as far as practicable to conduct tree-planting activities in the
community where they operate or its immediate environs.
4. Information accessing and dissemination. To determine the capability of the
cooperative to access, process and disseminate information from/to its members and
community. It looks into the function of the organization as an empowering and
responsive mechanism.
5. Gender, Youth, Elderly, Children, and Persons with Disability. To determine how the
cooperative has contributed in the social capital development for the welfare of the
youth, the elderly, children, and persons with disability and the promotion of the gender
fair culture and practices.
6. Leadership and Organizational Management. To highlight the attributes of the
leaders/officers of the cooperative and efficiency in managing the affairs of the
organization as it relates with its members and with government.

Sec. 8.Sanctions. The failure of the cooperatives to submit to the Authority of the required
Social Audit Report conducted by the Accredited Independent Social Auditor shall mean non-
compliance with the required reports and will be meted with corresponding penalties in
accordance with R.A. 9520.

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 RULE 12 – FINANCIAL SERVICE COOPERATIVE (FSC)

Sec. 2. Functions of FSC. A FSC is a financial organization owned and operated by its members
and authorized to provide the following services, exclusively to its members: (a) the functions
of credit cooperatives and other cooperatives, including multipurpose cooperatives, that
provide savings and credit to their members; and (b) other financial services subject to
regulation by the BSP.

Sec. 3 . Coverage. (1) All Financial Service Cooperative organized for the primary purpose of
engaging in savings and credit services and other financial services, and (2) Existing
cooperatives with savings and credit facilities which has formally notified the Authority of their
intention to exercise enhanced functions and satisfied the requirements of CDA for conversion
to Financial Service Cooperative.

Sec. 6. Minimum Capitalization Requirements. Only those cooperatives with minimum Paid-up
Capital of at least Ten Million Pesos (Php 10,000,000.00) shall qualify to register as FSC without
prejudice to additional capital requirements that maybe prescribed by the BSP for a particular
financial service regulated by the BSP that will be offered by the FSC.

Sec. 14. Net worth. The Net Worth of the FSC shall, at all times, not be less than an amount
equal to eight percent (8%) of its risk assets. The net worth positions should be sufficient to
meet competitive pressure and adverse economic conditions as they arise. It should enhance
the safety of the members’ shares and keep pace with growth in FSC assets.

Sec. 16. Reserve Requirements against Deposit Liabilities. FSC shall maintain a Liquidity
Reserve Fund that will be restricted in nature equivalent to at least two percent (2%) of their
savings and time deposit liabilities.

RULE 13 – VOLUNTARY ARBITRATION

“Art. 137. Settlement of Disputes, Conciliation, and Mediation Proceedings. - Disputes

among members, officers, directors, and committee members, and intra-cooperative, inter-
cooperative, intra-federation or inter-federation disputes shall, as far as practicable, be settled
amicably in accordance with the conciliation or mediation mechanisms embodied in the bylaws
of cooperatives and in such other applicable laws.

The conciliation and mediation committee of the cooperative shall facilitate the
amicable settlement of intra-cooperative disputes and disputes among members, officers,
directors, and committee members.

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Sec. 3. Powers/Authority of the Voluntary Arbitrator/s. The Voluntary Arbitrator/s shall have
the following powers/authority:
a. To hold hearings and to receive evidence necessary to resolve the issue/s subject of
the dispute.
b. To require any person to attend hearing/s as witness or to cause production of
documents when the relevancy and the materiality thereof are vital to the
resolution of the case.
c. To administer oath.
d. To cite in contempt any person disturbing the proceeding and/or who willfully defy
lawful orders of the Voluntary Arbitrator/Arbitrators.
e. To issue a Writ of Execution, if necessary.
f. To exercise such other powers and functions as may be necessary to resolve the
dispute.

Sec. 7. Venue of Action. All complaints shall be filed with CDA-Extension Office having
administrative jurisdiction over the cooperatives. However, for complaints involving
cooperatives registered with the Central Office such complaint shall be filed with the latter.

Note: The above provisions are just highlights of the IRR (selectively identified for purposes of
the Basic Cooperative Course). It is advisable to read the whole document (IRR) to get a
complete understanding of this important document.

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 STRATEGIC & OPERATIONAL PLANS

PLANNING

PLANNING is a way of managing change and a systematic way of thinking.

PLANNING must lead to a long term commitment, based on a realistic appraisal of

resources and be based on the involvement of all groups.

PLANNING can affect the future of the organization.

PLANNING needs a community consensus to improve present situation and needs a

systematic approach.

PLANNING DIMENSIONS

• PLANNING

- Determining what you want to accomplish and developing approaches to

achieving your objectives.

• PLANNING DIMENSIONS

Type of Plan Scope Time

BOARD Strategic Broad/directional Long-range

MANAGEMENT Operational Narrow/specific Short-range

STRATEGIC & OPERATIONAL PLANNING

• Strategic Planning
– The process of developing a mission and long-range objectives and determining
in advance how they will be accomplished.
• Operational Planning
– The process of setting short-range objectives and determining in advance how
they will be accomplished.

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TWO TYPES OF THINKING

STRATEGIC PLANNING OPERATIONAL PLANNING

Strategic decisions are fundamental, Operational decisions primarily affect

directional and over-arching the day-to-day implementation of
strategic decisions

Strategic decisions usually have longer- Operational decisions usually have

term implications immediate (less than 1 year)
implications
Asks: "Based on our current Asks: "What do we need to be doing for
understanding of environment, are we the upcoming year/immediately to best
doing the right thing? How can we best accomplish our mission?"
use our resources to achieve our
mission?"

 STRATEGIC PLANS
Focus on issues of change, adaptation and innovation

 OPERATIONAL PLANS
Focus on issues of control and efficiency

STRATEGIC PLANNING

 COOPERATIVE STRATEGIC PLAN

IS YOUR ORGANIZATION PREPARED TO PLAN EFFECTIVELY ?

 Consensus on the need to plan
 Agreement on the scope
 Concept of planning
 Set realistic objectives
 Determine how meaningful

IS YOUR ORGANIZATION PREPARED TO PLAN EFFECTIVELY ?

 Involvement can be achieved.
 Determine the types of resources & services needed
 Identify the time requirement
 Develop partnership with governments

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COOPERATIVE STRATEGIC PLAN

What are we really aiming for ?

Key Factors

• Financial Viability

• Operational Efficiency

• Competitive Position

• Member Satisfaction

• Employee Satisfaction

OPERATIONAL EFFICIENCY

Measure the effectiveness of workflow or processes of service delivery.

.. all members are served

COMPETITIVE POSITION

The degree of acceptance of “ COOP brand ” in the market.

“ How are we compared with competitors? ”

Are we 1st, 2nd, 3rd class or no class ?…. On the eyes of members, public, government.

MEMBERSHIP SATISFACTION

How many % of the members and users of cooperative services.

“ savers and good borrowers ”

EMPLOYEE SATISFACTION

Indicators…..

 Less staff turn-over

 No labor dispute
 High degree of sense of ownership
 High level of innovation teamwork
 Value based management

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 OUR TARGET

 SPECIFIC, MEASURABLE, TIME SPECIFIED

 BUILDING BLOCKS THAT SUPPORT THE OBJECTIVE

CRITERIA FOR PREPARING STRATEGIC PLAN

a). Attainable
b). Achievable
c). Identified the area
d). Short Term Plan
e). Long Term Plan

IDEAS FOR PREPARING STRATEGIC PLAN

* Coop goals
* Activities
* Time frame
* Responsible group / person
* Budget requirements
* Target output
* Actual output

7 STEPS TO EFFECTIVE STRATEGIC PLANNING PROCESS

• Step 1 - Review or develop Vision & Mission
• Step 2 - Business and operation analysis (SWOT Analysis, etc)
• Step 3 - Develop and Select Strategic Options
• Step 4 - Establish Strategic Objectives
• Step 5 - Strategy Execution Plan
• Step 6 - Establish Resource Allocation
• Step 7 - Execution Review

MONITORING & EVALUATION

 Identify the progress.
 Ensure adjustments can be made.
 Identify economic and social impact.
 Allows for identification of partner criteria for evaluation.
 Provides members with progress snapshots.
 Basis for adjustments and updates.

WHY UPDATE?
 Reviews may lead to updates
 Shift in economic development priorities occur
 Potential new opportunities arise

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UPDATE STRATEGY
 What sectors are priorities.
 What type of input is needed.
o Public
o Stakeholders
o Professional help

FAILURE TO UPDATE
 Lack of support for another planning process
 Neglect of mandate to keep an up-to-date plan
 Abandonment of strategy designed for long-term solutions

OPERATIONAL PLANNING

is a process and answers the questions:

• What are you aiming to achieve?

• What you are going to do?
• When are you going to do it?
• How much will it cost?
• How will you know you’ve achieved your objectives?

OPERATIONAL PLANNING 3-STEP PROCESS

1) Establish ‘departmental’ objectives
2) Agree on activities
3) Propose timetable, resources and KPI’s

OPERATIONAL PLANNING

Step 1: Establish ‘departmental’ objectives

• Focus on achieving Strategic Plan objectives
• Make sure they are SMART
• (Specific, Measurable, Actionable, Realistic and Timetabled)
• Work on making them really clear
• Maximum of 3 – 6 objectives
• Check with colleagues

Step 2: Agree activities

• Challenge current activities
• Brainstorm new activities

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 • Maintain focus on Strategic Plan objectives
• Identify activities that may cease

Step 3: Propose timetable, resources & KPI’s

• Establish staff time and money required
• Remember staff have approximately usable 160 days per annum
• Categorize priorities as:
- Critical to achieve Strategic Plan objectives
- Important, but insufficient resources to achieve this year
- Contributes to mission, but could be done later
• Be realistic about time-frames

SOME TIPS
• First plan each activity without compromise
• Once all activities are planned, assess overall resource implications
• Identify interdependencies
• Then prioritise, change activities to fit budget guidelines
• Don’t change time and financial budgets without changing the activity
• Nail down interdependencies

SO WHAT DO I HAVE TO DO…

• Review your organisation’s Strategic Plan
• Prepare plan submission in agreed format
• Discuss with colleagues and improve
• Submit draft to line manager
• Revise following robust review with line manager
• Submit final plan
• Support colleagues throughout

THE CRUCIAL POINTS THAT SHOULD ALWAYS BE CONSIDERED DURING OPERATIONAL

PLANNING ARE AS FOLLOWS:
• What is the desired outcome and how can it be achieved?
• How many staff members are needed to complete the job?
• What equipment is needed for these tasks?
• What health & safety measures need to be considered?
• In what order do the tasks need to be completed?
• How will the project be monitored during this process?

REFERENCES:
• Robert N. Lussier, Management Fundamentals - Concepts, Applications, Skills Development
• Mike Hudson, Three Step Approach to Operational Planning
• Signature Resources & C2 Strategies, Strategic Vs Operational Mind Sets

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 VISION, MISSION & GOALS

V I S I O N S T A T E M EN T D E F I N E D

• A compelling image of the preferred future that sets out a group’s highest aspirations
• A realistic, credible, attractive future for your organization. There is no more powerful
engine driving an organization toward excellence and long-range success than an
attractive, worthwhile, and achievable vision of the future that is widely shared by your
internal audiences and most important external audiences
• A clear, positive, inspirational statement, describing what the organization is striving to
be in the future, expressed in simple specific terms.

What our Vision Helps us do:

• It establishes purpose of the ORGANIZATION
• Coordinate actions and efforts
• It creates a future for the ORGANIZATION

Vision describes what you hope to become in the future…

• Shared and supported
• Comprehensive and detailed
• Positive and inspiring

Features Of A Compelling Vision

• Graphic
– Must conjure a vivid image in your mind
– Stimulates the imagination
• Specific
– Finite and descriptive
– Avoid motherhood statements and non-quantifiable descriptions (e.g., God-
fearing, safe, peaceful)
• Time-bounded
– Include a timeframe for achieving the vision, otherwise, it will be a never-ending
journey
• Measurable
– Establish indicators to determine if targets/objectives are being met
– Base target figures on data from the coop
• Simple but catchy
– Avoid complicated and highfaluting words that are difficult to remember
– Use familiar words or those in the vernacula
• Shared
– Vision should be based on the common values of the MEMBERS
– aligns group members’ efforts
– poses a challenge for the group

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 • Expresses highest aspirations
– describes how group will “make a difference”
• Achievable
– is an “ultimate possibility”
– describes something that
can happen

“A vision, to be effective, must convey meaning, contain realistic depth, and resonate
with people.”
White, R., et al. (1996).
The Future of Leadership.

“The problems of the world cannot possibly be solved by skeptics or cynics whose
horizons are limited by the obvious realities.

We need men (and women!) who can dream of things that never were.”

- John F. Kennedy

BARRIERS TO CREATING VISIONS

• Lack of concern about the future of the organization

• Assumption that the past predicts the future for the organization
• Failure to think “out of the box”

IMPORTANT FACTORS FOR CREATING AN ORGANIZATIONAL VISION

• Vision must reflect a variety of perspectives inside the organization.

• Vision must be built through careful dialogue and thought.
• Vision must be based on an accurate understanding of current conditions.
• Vision must be supported by plans to implement and maintain vision.
• Vision must have follow-through and nurturing.

ACHIEVING THE VISION REQUIRES…

• Strong intuition
• Willingness to take a chance and change
• A learning environment
• Long-term commitment

DRAFTING OUR VISION STATEMENT

• Who are we?
• What do we do?
• For whom do we do it?

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 • Why do we do it?
• If we continue doing this, what will be the result?

Vision without action

is merely a dream.
Action without vision
merely passes time.
Vision with action
can change the world.

MISSION STATEMENT DEFINED

• A particular task or goal assigned to a person or a group; a statement issued by an

organization setting out the key tasks and aims
• A brief, clear statement of purpose; tells "why" the organization exists.

MISSION STATEMENTS ARE…

More philosophical in nature and often describe who you hope to reach or what the
organization hopes to accomplish—it is very likely that many organizations share the
same mission

A Mission Statement defines the organization's purpose and primary objectives. Its
prime function is internal – to define the key measure or measures of the organization’s
success – and its prime audience is the leadership team and members.

Mission statement is a brief, short statement that focuses on current business activities
-- “who we are, what we do, who are our clients & how does the cooperative conducts
itself.”

A mission statement must be broad enough to inspire its membership in the

organization but narrow enough to focus its efforts.

Usually written in 1 or 2 sentences.

IMPORTANCE OF A MISSION STATEMENT

A clear mission connects the VISION to a method for achieving that VISION. It can guide
the coop’s leaders in making major policy decisions about alternative courses of actions.

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 Is It Necessary?
The mission statement - the organization's "preferred future" - ensures consistency &
clarity of purpose throughout the organization.

It provides a point of reference for all major planning decisions.

When it is communicated as a basis for key decisions, commitment is gained from within
the organization and support from those outside is generated.

What should it tell you?

Some of the following questions should be answered:

 what is our business?
 what is our principle service/product?
 who are our principal clients/users?
 what is unique about our organization (geographic, type of member, mandate)?

G O A L DEFINED

Goal is defined as the measurable end-result that derives its impetus from the MISSION
statement.

IMPORTANCE OF A GOAL

Short term goals have a time period and usually one (1) year or less and should be
specific, measurable, and achievable, related to members and time targeted. They serve
as the guide for collective actions and guide for cooperative efforts and the decision
makers.

It is simpler than the MISSION but broad enough to cover resources over a certain time
& specific enough to guide decision-makers.

After specifying the long term goal, it is time to get down to specifics by writing short-
term goals. The coop describes what it wants to achieve & when it is to be done.

Short-term goals have a time period, usually one year or less & are measurable. Follow the
SMART rule, a useful management acronym that defines goals as:

Specific – they should challenge

the manager & the team
Measurable – they must be
quantifiable
Achievable – they must be realistic

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Related to Members – they should
improve services
Time-targeted – they must have an
end date

The GOAL should be directly related to the strategic interventions. It serves as the guide
for collective actions in focusing on its coop efforts, resources & talents and guides the
decision makers.

SAMPLE OF GOAL STATEMENTS:

* To provide livelihood opportunities to coop members

* To increase deposits from new members equal to 10% of total present deposits within
the next year. (This goal intends to expand your market share beyond your present
membership)

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 IMPORTANCE OF POLICIES

WHAT IS POLICY?

A statement that provides a guide for decision making.

A statement of general principles and specific rules to be used as guidelines for, and
constraints on, future decisions and actions of management at all levels of the
organization.

Policy is a rule for action, manifesting or clarifying specific organization goals, objectives,
values or ideals.

IMPORTANCE OF POLICIES
• Clear policies help the co-operative function smoothly and consistently.
• Policies establish general guidelines or general statements on issues. They provide a
framework for decisions and discussions on similar questions.

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 • Policies clarify responsibilities and guide board, management and staff when they carry
out their roles.
• Policies give direction and unity of purpose to the co-operative.
• Policies help mediate among and between different and sometimes conflicting values of
the members, board and management.
• Policies allow continuity. Outside the boardroom, they are a measure of control to the
board.

Two approaches which are relevant as guides to determining policy areas

1. According to the groups with claims on the organization’s resources

- owners, customers, suppliers, employees, creditors, community and government
- board, membership, committees, management, and staff

2. According to basic functional areas that an organization must perform

- Marketing
- Transformation (from input to output)
- Finance
- Personnel

Some Policy Areas

• Organizational & Governance Policy
- Board and Manager Relations
• Membership Policy
• Operations Policy
• Financial Management
- Asset/Liability
- Cash and Investment
• Accounting Policy
• Internal Control
• Human Resource Development
• Budgetary Financial Control
• Training Policy
• Earnings and Reserves
• Education and Promotion
• Public Relations
• Insurance
• Services
• Audit

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 One of the primary criteria to test the need for the policy is:
Does the policy cover a recurring or repetitive condition?

Questions to test of the adequacy of organizational policies

1. Do the policies reflect actual or desired organizational practices and behavior?

2. Are the policies practical, given the existing or expected situations?
3. Do policies exist in the areas critical to the organization’s success?

The policy making process consists of the following phases:

Step 1: Initiating policy thinking
Step 2: Fact-finding and situational analysis
Step 3: Making recommendations to the executive committee
Step 4: Preparing a written policy statement
Step 5: Discussing a proposed policy statement
Step 6: Issuing a written statement of policy
Step 7: Interpreting and living with a policy decision
Step 8: Interim appraisal
Step 9: Officially reviewing and evaluating an existing policy
Step 10: Revising a policy statement

• Policies are general guidelines to follow in making decisions and taking action.
• Procedures are chronological steps to follow to complete a particular action.
• Rules cite specific actions which usually are stated in a way as to leave no doubt about
what is to be done.

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