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What comes to your mind when you hear the word “cooperative” or “kooperatiba”?
You might think of cooperatives as a source of loans. Or you might be reminded of the school coop store where you bought snacks and supplies as an elementary or high school student.
But coops are more than just that.
Coops may not be as popular and exciting as businesses and traditional investments. However, these organizations play a crucial role in the country’s economic growth and improving the lives especially of marginalized sectors in the society.
A cooperative may also be worth the time and money of regular folks like you. Whether you’re seriously considering joining a coop or just curious about what it can do for you, here’s everything you need to know about cooperatives in the Philippines.
What is a Cooperative in the Philippines?
Officially, here’s how the Philippine Cooperative Code of 2008 (Republic Act 9520)1 defines a cooperative in the Philippines:
“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 risks and benefits of the undertaking in accordance with the universally accepted cooperative principles.”
Sounds like a lot to digest, huh?
Let’s flesh it out the simplest way possible by highlighting the key characteristics of a cooperative in the official definition.
- Autonomous – A cooperative, or coop for short, is an independent organization. This means it is not affiliated with any political, social, religious, or whatever kind of group. However, cooperatives may partner with the government, NGOs, and other coops to achieve their goals.
- Duly registered – Legitimate cooperatives are registered with the Cooperative Development Authority (CDA), the government agency that regulates cooperatives in the Philippines.
- Association of persons with a common bond of interest – People sharing the same social, economic, and cultural needs come together to form and run a cooperative. To meet their shared goals, members finance their coop by contributing to the coop’s pooled capital and use the coop’s products and services. They also share in the benefits and risks of coop ownership.
Simply put, a cooperative is an independent, CDA-registered organization owned and operated by its members working together to achieve their common goals.
Different Types of Cooperatives
Cooperatives in the Philippines come in 20 different types. Some are formed to provide certain services (e.g., financial, transportation, healthcare, etc.) while others are for specific types of members with common interests (e.g., producers, workers, fishermen, etc.).
Here’s a quick overview of each type of cooperative.
A credit coop is an association of small borrowers and savers (typically micro and small business owners, small farmers, and rank-and-file employees) who cannot afford access to traditional banking services. This type of coop helps members save and/or borrow money at a much lower cost than what banks charge.
Examples: Mutual Savings and Credit Cooperative of the Philippines, PLDT Employees Credit Cooperative, and U.P. Credit Cooperative
A consumers cooperative is owned and controlled by consumers who buy goods and services they need through their coop. Consumers coops procure and distribute products at better prices, quality, and delivery service to members and non-members.
Examples: Baguio Teachers Camp Consumers Cooperative, Basao Farmers Consumers Cooperative, and Tiwi Indigenous Peoples Asenso Consumers Cooperative
This type of coop is created, owned, and operated by people who produce the same types of goods such as crafts and agricultural products for sale to members and non-members.
Producers coops provide processing, marketing, and distribution services to members who are usually farmers, fishermen, or artists. They help members get better pricing and access bigger markets.
Examples: Sulu Indigenous Resource Cooperative, Nueva Ecija Goat and Sheep Raisers Association Producers Cooperative, and Calinog Small Sugarcane Planters and Farmers Producers Cooperative
Marketing coops cater to producer-members (typically farmers), providing services such as packing, promoting, and selling products for them. Doing so eliminates the need for middlemen between producers and consumers, which helps maximize the profits that members receive from their produce.
Examples: Palawan Sunflower Farmers Marketing Cooperative, Bacacay Fisherfolk Marketing Cooperative, and San Miguel Central School Teachers and Employees Marketing Cooperative
Examples: Citizens Construction and Engineering Consultancy Service Cooperative, VILMMAR Manpower Service Cooperative, and Workforce Pilipinas Tourism Service Cooperative
An advocacy coop promotes and advocates a specific cause such as education and environmental conservation. It organizes and conducts charitable activities, like training and livelihood projects, to help its beneficiaries.
Examples: PH-Haiyan Advocacy Cooperative, Community Empowerment and Transformation Advocacy Cooperative, and Philippine Natures Educators Advocacy Cooperative
Agrarian Reform Cooperative
This type of coop exists to help marginal farmers and agrarian reform beneficiaries develop a system for land tenure, development, consolidation, or management in locations covered by agrarian reform.
Examples: Antipolo, Namo, Nasuje, Inararan, Calomagon Agrarian Reform Cooperative, Dalit Brookside Agrarian Reform Beneficiaries and Farmers Multi-purpose Cooperative, and Asturias Farmers Agrarian Reform Cooperative
A cooperative bank provides various financial services to cooperatives and their members. Coop members, who are also clients of the bank, own and operate a cooperative bank.
Examples: Cooperative Bank of Ilocos Norte, Metro South Cooperative Bank, and Cooperative Rural Bank of Bulacan
Through this type of cooperative, dairy farmers produce, process, and/or market milk and dairy products to retail stores, wholesale stores, or in their own stores.
Examples: Mountain High Dairy Cooperative, Cagayan Valley Maunlad Cattle and Dairy Cooperative, and Northern Tumauini Cereal and Dairy Farmers Cooperative
Education cooperatives own and run licensed educational institutions in the Philippines.
Examples: One Pinoy Wins Education Cooperative, The Learning Library Education Cooperative, and Victoria Community Education Cooperative
Typically operating in rural communities, electric cooperatives engage in power generation and distribution to provide electricity to their members.
Examples: Benguet Electric Cooperative, Palawan Electric Cooperative, and Siargao Electric Cooperative Inc.
Financial Service Cooperative
Financial service coops provide services such as deposits, loans, mortgages, insurance, and investment at the lowest cost and highest return possible. Credit coops and cooperative banks fall under this general category.
This type of coop is created and operated by marginalized fishermen who manage each others’ fishing activities and market their fresh and processed products.
Examples: Parañaque Aquamarine Fishermens Cooperative, Samahan ng Maliliit na Mangingisda sa Dagupan City Fishermen Cooperative, and Dock Area Fishermen Cooperative
Health Services Cooperative
Health services coops provide for the medical, dental, maternity, and other healthcare needs of their members.
Examples: Laguna Health Services Cooperative, Medical Mission Group Qatar Overseas Filipino Expatriates Hospital and Health Services Cooperative, and Metro Rizal Doctors Health Services Cooperative
Housing coops help their members get access to low-cost and secure housing by sharing homeownership costs.
Examples: Alyansa Ng Mamamayan Sa Caloocan Housing Cooperative, Ang Bagong Bahay Housing Cooperative, and Damayan Neighborhood Housing Cooperative
Insurance coop members share their premium to insure the life and property of their cooperative and members.
Examples: CLIMBS Life and General Insurance Cooperative, 1 Cooperative Insurance System of the Philippines Life and General Insurance, and Coop Life General Insurance & Financial Service Agency
Transport coops provide land or sea public transport services using small vessels such as jeepneys, buses, taxis, transportation network vehicle services (TNVS), or tourist vehicles.
Examples: Senate Employees Transport Service Cooperative, Commonwealth Transport Service and Development Cooperative, and Lagro – Novaliches Jeepney Drivers and Operators Transport Cooperative
Water Service Cooperative
A water service coop provides a reliable supply of potable water for its members’ households by reducing the costs of transactions and water system management.
Examples: Blue Water Service Cooperative, Community Water Service Cooperative of Bagong Silang, and Antipolo Water Service Cooperative
Existing in various industries, workers coops are built and owned by employees of a business to create jobs and business opportunities for their members.
Examples: Cubao Motor Specialist Workers Cooperative, Samahang Inilulunsad Ang Kapayapaan at Pag-unlad (SIKAP) Workers Cooperative, and Unified Skilled Workers Cooperative
A lot of cooperatives in the Philippines are of multi-purpose type, offering two or more types of services to their members. For example, a coop may provide both lending and production services to its farmer-members.
Examples: Tulong Kapatiran Multi-purpose Cooperative, Cordillera Agriculturists Multi-purpose Cooperative, and Ateneo De Manila Multi-Purpose Cooperative
How Do Cooperatives Work?
Before you make any investment in a cooperative, it’s crucial that you deeply understand how coops in the Philippines work. In doing so, you’ll know if investing in coops matches your goals and needs as an investor.
Here are the basics of cooperative operations that every beginning investor needs to know.
1. People start a coop to achieve their common goals
People organize a cooperative to help improve their quality of life. To accomplish this primary goal, coops do the following things for their members:
- Provide products and services to help members increase their income, savings, investments, productivity, and purchasing power
- Provide the most favorable social and economic benefits
- Promote cooperative practices and new ideas in business and management
2. Members join a cooperative
To join an existing coop, you need to become a member first.
Cooperative members are classified into two types: regular and associate.
Regular members are those who have complied with a cooperative’s membership requirements. They enjoy all the rights and privileges, including the right to vote and be voted upon, under the Cooperative Code and their coop’s by-laws.
Unlike shareholders of public corporations who follow the one-share, one-vote rule, members participate in the election of coop officers on a one-person, one-vote basis. They have equal voting rights no matter how much contribution they make to the coop’s capital.
Meanwhile, associate members have no voting rights and are entitled only to rights and privileges stated in their coop’s by-laws.
3. Members finance the cooperative and share in the profits
Cooperatives run an enterprise to generate money for providing goods and services to their members. Like any business, coops need capital to fund their operations, particularly for buying supplies, paying bills, and investing in different assets, among others.
One of the ways coops raise capital for their business activities (such as lending, providing electricity or water service, etc.) is through memberships. They require aspiring members to pay a minimum fee—called the share capital—which is pooled together with fees collected from other members.
Typically, cooperatives charge members Php 100 as share capital per month, though the amount may vary from one coop to another.
Other sources of capital for cooperatives include members’ deposits and interest payments on loans, as well as donations, grants, subsidies, and other forms of financial assistance from public and private institutions in the Philippines or abroad.
Although cooperatives in the Philippines focus more on providing services than making money, they return the profits they’ve earned to their members. A portion of a coop’s earnings is reinvested in its enterprise.
Why Join a Cooperative?
“Is a cooperative a good investment?” This is one of the most searched terms related to coops on Google. Probably, you’re reading this because you want to know if it’s really worth investing your money in cooperatives.
Let’s set your expectations right, shall we? Strictly speaking, there’s no such thing as “investment in cooperatives.” The CDA even issued an advisory2 encouraging the public to be careful and not be confused with the term “investment” in coops.
Citing Article 72 of RA 95203, the cooperative regulatory agency clarified that the Cooperative Code does not mention anything about allowing investments from any willing investors. Rather, coops get their funding from their members’ share capital and not from external sources.
Even if putting your money in a cooperative is not an investment per se, you’ll benefit much from being a coop member.
Thus, the question we’ll attempt to answer is this: Why should you join a cooperative? There are at least 10 good reasons to do so.
1. Earn dividends regularly
The share capital paid by coop members earn dividends ranging from 4% to as high as 20% per year depending on the coop’s financial performance. Such dividend rates are higher than interest rates on traditional savings accounts, time deposits, and even other types of investments.
Profits a cooperative has earned as a whole are distributed equitably among its members once or twice a year.
2. Receive patronage refund
Another way to earn money from a cooperative is through patronage refund4. Coops give back a portion of their profit (in cash and/or gifts) to their members who have availed of their products and services.
For example, if you take out a loan from a credit cooperative, you’ll be paid a certain percentage of the interest income from loans that the coop earned for the year. The amount you’ll receive as patronage refund will be based on how much money you borrowed from the coop.
3. Avail of products and services at affordable prices
Coop members get access to products and services at lower costs than those available commercially. For instance, you can save money on hospital fees if you avail of medical services at a health services cooperative. Likewise, tuition and other school fees are less expensive than those of private schools.
4. Increase income and financial security
A 2019 research on cooperatives in the Philippines5 by the U.S. Overseas Cooperative Development Council (OCDC) found that coop members have higher income levels and a greater sense of financial security than non-members.
According to the study titled “What Difference Do Cooperatives Make?”, 48.5% of cooperative members belong to the top four socioeconomic classes (rich, upper-middle, middle-middle, and lower-middle income classes), which is higher than 41% of the general population.
Also, 94.4% of coop members said that their membership had positive effects on their economic status.
5. Be exempted from taxes on coop transactions
Under the Philippine Cooperative Code, coops enjoy tax exemption6 to enable them to serve their members. Transactions of cooperatives in the Philippines with their members are tax-exempt.
According to the CDA, qualified coops are exempted from paying income tax, value-added tax (VAT), percentage tax, documentary stamp tax, real property tax, and other types of taxes.
For coop members, this means their deposits and investments are not subject to withholding tax.
6. Earn higher interest on savings
Some Filipinos join financial service coops to earn higher yields on their savings and time deposit accounts. Interest rates on deposit products of coops range from 4% to 8%, which are way higher than bank rates that are typically lower than 1%.
7. Get low-interest loans for emergencies and other purposes
Cooperatives, especially credit and multi-purpose coops, offer members a more affordable lending option than commercial banks. Coops provide a wide range of loan products for various purposes with much lower interest rates of around 4.8% to 26% per annum7.
Members can borrow money from their coop for short-term cash needs, vehicle or home purchase, business capital, livelihood project, tuition payment for dependents, and other expenses.
8. Enjoy other perks for coop members
Coop members are entitled to privileges depending on their cooperative’s by-laws. Here are some examples of perks that members get:
- Freebies and discounts on merchandise and services of the coop
- Discounts at partner establishments
- Livelihood programs and other assistance programs
- Seminars and training on gender and development, HIV awareness, and other topics to improve members’ well-being
- Death benefits
- Scholarships for members’ dependents
- Incentives, rewards, and gifts
9. Contribute to your community’s development
When you join a cooperative, you don’t only reap financial benefits for yourself but also help the coop achieve its social, economic, and cultural goals. If your coop succeeds in its business and investments, the community it serves stands to benefit as well.
According to the OCDC study on Philippine cooperatives, 74% of non-members believe that activities of cooperatives positively affect the overall economic development of the community.
10. Coops are more stable than typical businesses
The democratic structure and processes of cooperatives result in more continuity to their business. Members have an equal footing in the coop’s business regardless of the amount of share capital they pay.
They can come and go without causing much disruption in the coop’s operations, which is unlike corporations where decisions lie on one person or a group of directors. This makes cooperatives more stable than most businesses.
How to Start Investing in Cooperatives in the Philippines
To become a member of a cooperative, here’s what you need to do.
Step 1: Check the list of registered coops in the Philippines
The CDA has a master list of registered and delisted cooperatives8 on its website. It’s a good starting point for searching for the right coops to subscribe to. However, the CDA data on cooperatives in the Philippines is rather outdated (with the latest update made at the end of 2018 as of this writing).
See the master list of registered cooperatives in the Philippines (list as of December 2018).
There are other ways to get updated information on coops online. For example, you can request data from the Freedom of Information (FOI) website9 (Just expect to wait a long time for your request to be processed).
Or you can do a Google search on the type of coop you’re looking for. An updated directory of transport coops10, for instance, is available on the website of the Office of Transportation Cooperatives, an agency under the Department of Transportation.
Step 2: Choose the coops you want to join in
When researching cooperatives in the Philippines, pay attention to the following details:
- Cooperative type – Consider the kind of products and services you want to avail from a coop. From there, you can select the right type of coop that meets your needs.
- Location and area of operation – The coop’s office should be accessible from where you live. Also, not all coops operate nationwide—some operate on a regional, provincial, or municipal/city level—so check if your location is covered.
- Total assets and net surplus – These are indicators of a coop’s financial performance. The higher the figures are, the more stable and less risky they are.
- Number of members – A coop’s membership size says a lot about its reputation and reliability.
These factors will help you narrow down your options for which coop to join in.
Step 3: Gather as much information as you can
Once you have a shortlist of cooperatives, collect data on them online. Check their website and social media accounts for the following critical information:
- Organization’s profile, history, mission, and vision
- Products and services
- Membership eligibility and documentary requirements
- Rights, benefits, privileges, and responsibilities of members
Knowing these details will help you determine if a certain coop is aligned with your goals and needs.
Step 4: Apply for membership
People interested in joining a cooperative go through an application process that typically involves the following steps (The exact procedure and order may vary per coop):
- Attend the Pre-Membership Education Seminar conducted by the cooperative in one of its offices. This will orient you on the operations, principles, and other important information about the coop.
- Fill out a membership application form.
- Submit the required documents along with the accomplished application form.
- Pay the pre-membership fees, including the initial deposit for your share capital.
- Wait for your membership approval. You’ll receive a confirmation message through text and/or email. Afterward, you’ll be informed of the next steps to take as a coop member.
Top 20 Largest Cooperatives in the Philippines
Maximize the benefits of being a coop member and lessen its risks by choosing the largest and most stable coops in the Philippines.
Here are the top 20 cooperatives based on asset size as of September 2019. With total assets reaching billions of pesos, these coops are aptly called billionaire cooperatives by the CDA.
|No. of Members
|ACDI Multi-purpose Cooperative
|Php 33.47 billion
|Philippine Army Finance Center Producers Integrated Cooperative (PAFCPIC)
|Php 22.43 billion
|Cebu CFI Community Cooperative
|Php 13.12 billion
|Php 6.58 billion
|PLDT Employees Credit Cooperative (PECCI)
|Php 5.32 billion
|DCCCO Multi-purpose Cooperative
|Php 4.78 billion
|AFP Finance Center Multi-Purpose Cooperative
|Php 4.53 billion
|ORO INTEGRATED COOPERATIVE
|Cagayan De Oro City
|Php 4.43 billion
|First Isabela Cooperative Bank (FICOBANK)
|Php 4.34 billion
|Perpetual Help Community Cooperative (PHCCI)
|Php 3.93 billion
|Metro South Cooperative Bank
|Php 3.86 billion
|Bureau of Jail Management and Penology Multi-purpose Cooperative (BJMP MPC)
|Php 3.5 billion
|National Confederation of Cooperatives (NATCCO)
|Php 3.36 billion
|CLIMBS Life and General Insurance Cooperative (CLIMBS)
|Cagayan De Oro City
|Php 3.32 billion
|Ayala Multi-Purpose Cooperative
|Php 3.24 billion
|Sacred Heart Savings Cooperative
|Php 3.04 billion
|Sorosoro Ibaba Development Cooperative (SIDC)
|Php 3.04 billion
|Pangasinan III Electric Cooperative (PANELCO III)
|Php 2.8 billion
|1 Cooperative Insurance System of the Philippines Life and General Insurance (1 CISP)
|Php 2.57 billion