Cooperatives are the SHOs presently utilized by the government as the more effective tools for economic development. The Cooperative Development Authority (CDA), the government agency in charge of development and monitoring cooperatives in the country gives this definition - a voluntary organization of people who have agreed to pool their resources together in order to undertake an economic enterprise for the purpose of meeting their common needs, and which they themselves democratically manage and control, and share the economic benefits on the basis of participation and patronage.
In this definition, cooperatives are SHOs which are also business enterprises which the members themselves own, manage and control in accordance with accepted democratic principles. They are not organized primarily for profit nor to serve other people but to serve the needs of their own members. Memberships in cooperatives is voluntary and open to all those who need their services. Finally, the economic benefits from cooperatives are shared by the members in proportion to the individual member's patronage of the business or enterprise.
The business or enterprise of the cooperatives may be classified according to the following activities:
a. credit cooperative- promotes thrift among its members and creates funds in order to grant loans for productive and
b. consumer cooperative - the primary purpose is to procure and distribute commodities to members and non members;
c. producer cooperative- undertakes joint production whether agricultural or industrial;
d. marketing cooperative -engages in the supply of production inputs to members, and markets their products;
e. service cooperative- engage in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric lights and power, communication and other services, and, other services; and,
f. multi-purpose cooperative-combines 2 or more of the business activities of these different types of cooperatives, e.g credit lending and production, production and provision of goods and services, etc.
Madane traces back multi purpose cooperatives to the subsistence farming traditions of Japan. Rural communities lived together by mutually assisting each other through need based production of primary commodities and exchange of surplus with others. The basic principle behind this concept is the urge to fulfill local needs though local effort and establish a mutuality of interests within the community.
With the implementation of R.A. 6938 or the Cooperative Code of the Philippines, almost all cooperatives are now registered as multi purpose cooperatives in order to simultaneously undertake four functions i.e., credit, marketing, purchasing and joint utilization of resources.
In order to effectively manage the resources of a cooperative a basic operating structure and functional flow chart is presented in Annex 1 and 2. The General Assembly elects from among themselves a set of Board of Directors who sets the policies and goals of the cooperative. They report to the members through General Assembly meetings. A Project Manager implements the policies through projects and reports to the Board of Directors. Please refer to Annex 3 for decision areas for Board of Directors and Project Manager.