Module 4: Managing a Cooperative

Topic 1: Strategic
Cooperative
Management: From
Vision to Action
Plan
Prepared by: Catherine B. Bolintiam
 Interactive Activity
Go to menti.com or

Access the link at

https://www.menti.com/6y6a1gvmh5

Type the code: 9310 9031

Scan the QR code

 Introduction
Cooperative management is an effective and purposeful relationship
between management in the meaning of cooperation between individual,
relatively independent organisations or individual with the aim to increase their
competitiveness. Cooperative management, also co-management, tries to
achieve more effective and equitable systems of resource management. In
cooperative management, representatives of user groups, the scientific
community, and government agencies should share knowledge, power, and
responsibility. Cooperative management is closely allied with collaborative
management, participatory management, community management, joint
management, and stakeholder management.
 Objectives
At the end of the topic, students are expected to:

Describe the Identify the internal Formulate the key

Understand the
concept of Flywheel aspects of financial aspects of
elements of CDA
of the cooperative managing the the assigned
flywheel
industry cooperative cooperative.
Flywheel of Value of
the Cooperative
Industry
 Flywheel of the
Value
The cooperative industry flywheel was developed from the analysis
of the strengths and risks of the cooperative industry’s value chains based
on the regional consultative workshops conducted in the second semester
of 2017. The first attempt of the cooperative industry to use the flywheel
framework for action, although the output can still be refined, was
encouraging as it allowed the participants to quickly focus on the essential
elements and a great start for spinning the industry’s actionable items
towards sustainable excellence.
 Creator of Flywheel

The “Flywheel” is a very useful analogy for implementing business strategy created by
Jim Collins. It describes how driving a new strategy is like getting a huge flywheel into motion.
Initially, there is no movement – many people think that the strategy is absurd – it is almost
impossible to imagine the flywheel at speed. With great exertion of will, the CEO is able to
deliver some results that get the flywheel moving. They appear small and trivial initially, but
create the credibility to move to more ambitious results. As more and more results accumulate,
more and more people throw their weight behind the wheel and the momentum of the flywheel
builds and builds.
CDA Flywheel
 Elements in the
Flywheel
The elements in the flywheel:
• Investing in the Right People - mirrors CDA’s strength in people. To
ensure that CDA’s low influencing strength gap is addressed, the verb
invest is added to the first element to mean proactively seeking the right
people with strengths in influencing. Likewise, the fourth element of the
flywheel leverages on the same strength in people.
• Invest in the Right Thinking
• Orchestrate Catalytic Interventions both pertain to resolutely closing
CDA’s organizational gaps in thinking and action. CDA’s core strength
are its capacity to provide strategic counsel and build lasting
relationships.
 Capital of
Cooperative

The capitalization of cooperatives and the accounting procedures shall

be governed by the provisions of the RA 9520 (Cooperative Code of the
Philippines) and the regulations which shall be issued.
 Capital Sources

Cooperatives registered under the Code may derive their capital from any or all of the
following sources:

(1) Member’s 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.
 Assignment of Share
Capital
In the assignment of Share Capital Contribution or Interest, no member
shall transfer his shares or interest in the cooperative or any part thereof unless.

(1) He has held such share capital contribution or interest for not less than one
(1) year.
(2) The assignment is made to the cooperative or to a member of the
cooperative or to a person who falls within the field of the membership of the
cooperative; and
(3) The board of directors has approved such assignment.
 Capital Build-up

The bylaws of every cooperative shall be provided for a reasonable and

realistic member capital build-up program to allow the continuing growth of
the members’ investment in their cooperative as their economic conditions
continue to improve.
 Shares

The term “share” refers to a unit of capital in a primary cooperative

the par value of which may be fixed to any figure not more than One thousand
pesos (P1,000.00). The share of capital of a cooperative is the money paid or
required to be paid for the operations of the cooperative. The method for the
issuance of share certificates shall prescribed in its bylaws.
 Fines

The bylaws of a cooperative may prescribe a fine on unpaid subscribed

share capital. Provided, that such fine is fair and reasonable under the
circumstances.
 Investment of
Capital
A cooperative may invest its capital in any of the following:

(a) In shares or debentures or securities of any other cooperative;

(b) In any reputable bank in the locality, or any cooperative;

(c) In securities issued or guaranteed by the Government;

(d) In real estate primarily for the use of the cooperative or its members; or

(e) In any other manner authorized in the bylaws.

 Revolving Capital
The general assembly of any cooperative may authorize the board of
directors to raise a revolving capital to strengthen its capital structure by
deferring the payment of patronage refunds and interest on share capital or
by the authorized deduction of a percentage from the proceeds of products
sold or services rendered, or per unit of product or services handled. The
board of directors shall issue revolving capital certificates with serial number,
name, amount, and rate of interest to be paid and shall distinctly set forth the
time of retirement of such certificates and the amounts to be returned.”
 Annual Audit
Cooperatives registered under this Code shall be subject to an annual financial,
performance and social audit. The financial audit shall be conducted by an external
auditor who satisfies all the following qualifications:

(1) He is independent of the cooperative or any of its subsidiary that he is auditing;

and

(2) He is a member in good standing of the Philippine Institute of Certified Public

Accountants (PICPA) and is accredited by both the Board and Accountancy and the
Authority.
 Audit Report

The auditor shall submit to the board of directors and to the audit
committee the financial audit report which shall be in accordance with the
generally accepted auditing standards for cooperatives as jointly promulgated
by the PICPA.
 Non-Liability for
Defamations
The auditor is not liable to any person in an action for defamation
based on any act, done, or any statement made by him in good faith in
connection with any matter he is authorized or required to do pursuant to this
Code.
 Right to Examine
A member shall have the right to examine the records required to be kept by the
cooperative under Article 52 of this Code during reasonable hours on business days and he may
demand, in writing, for a copy of excerpts from said records without charge except the cost of
production.
“Any officer of the cooperative who shall refuse to allow any member of the cooperative to
examine and copy excerpts from its records shall be liable to such member for damages and shall
be guilty of an offense which shall be punishable under Article 140 of this Code: Provided, That
if such refusal is pursuant to a resolution or order of the board of directors, the liability under
this article shall be imposed upon the directors who voted for such refusal: Provided, further,
That it shall be a defense to any action under this article that the member demanding to examine
and copy excerpts from the cooperative records has improperly used any information secured
through any prior examination of the records of such cooperative or was not acting in good faith
or for a legitimate purpose in making his demand.
 Safety of Records
Every cooperative shall, at its principal office, keep and carefully
preserve the records required by this Code to be prepared and maintained. It
shall take all necessary precaution to prevent its loss, destruction or
falsification.
 Allocation and
Distribution of Net
Surplus

Notwithstanding the provisions of existing laws, the net surplus of

cooperatives shall be determined in accordance with its bylaws.

Every cooperative shall determine its net surplus at the close of every
fiscal year and at such other times as may be prescribed by the bylaws.
The net surplus of every cooperative shall be distributed as follows:

(1) An amount for the reserve fund which shall be at least ten per centum (10%) of net
surplus: Provided, That, in the first five (5) years of operation after registration, this
amount shall not be less than fifty per centum (50%) of the net surplus.

(2) An amount for the education and training fund, shall not be more than ten per centum
(10%) of the net surplus. The bylaws may provide that certain fees or a portion thereof be
credited to such fund. The fund shall provide for the training, development and similar
other cooperative activities geared towards the growth of the cooperative movement:
(3) An amount for the community development fund, which shall not be less than three per
centum (3%) of the net surplus. The community development fund shall be used for projects
or activities that will benefit the community where the cooperative operates.

(4) An optional fund, a land and building, and any other necessary fund the total of which shall
not exceed seven per centum (7%).

(5) The remaining net surplus shall be made available to the members in the form of interest
on share capital not to exceed the normal rate of return our investments and patronage
refunds: Provided, That any amount remaining after the allowable interest and the patronage
refund have been deducted shall be credited to the reserve fund.
 References
The Cooperative Development Code of the Philippines. Retrieved from
https://cda.gov.ph/philippine-cooperative-development-plan-pcdp/

Philippine Cooperative Development Plan. Retrieved from https://cda.gov.ph/philippine-

cooperative-development-plan-pcdp/

Cooperative Management. Retrieved from

http://oregonstate.edu/instruct/anth481/ectop/ecco-m.html