Let us continue our previous reflection on Statutory Funds that must be funded every year. The required allocation and funding of 7% for optional fund is mandatory for all types of cooperatives.
Our previous study indicated that not all cooperatives have written plans and programs on how to spend their optional fund. Other cooperative leaders and staff use the funds in the acquisition of land and building but others plow back the funds and use it to capitalize operations.
As part of cooperative growth, I would like to propose that every cooperative should come up with plan or program on its utilization. Most cooperatives prepare annual plan and budget. However, there is a need for details on how much should be segregated for land, building and for other purposes. This will help management and staff and officers ensure availability of funds as the need arises.
As a tip, it is encouraged that cooperatives identify and prioritize intended projects. After determination of priority areas preparation of policy on its utilization follows. In the allocation and distribution, corresponding percentages should be assigned for land, building, and other purposes to ensure the spread of allocation. Allocated optional fund must be funded separately based on the approved policy on distribution.
Some best practices of fast growing cooperatives are the recognition on the importance of being equipped with the right information as a tool used in decision-making. They allocate in their annual plan and budget for investment. Invest in acquisitions of house and lot ready for occupancy follows. Such facility is offered to members for business purposes. This practice increases the services offered to members as they are supported in having secured business centers or place to dwell. Without allocation and funding, this situation cannot happen.
Another practice is funding retirement fund out of allocated optional fund. Some cooperatives that failed to provide retirement fund in the past have difficulty in sourcing out funds for this purpose. One remedy is to review the policy on the use of optional fund and harness the provision that it can be used for other purposes other than land and building. Inclusion of provision on how much of the allocated optional fund for other purposes can safeguard possible abuse in its utilization.
I congratulate cooperatives that make use of their optional fund in accordance with approved plans and programs. The involvement of officers, staff and members in the approval of policy on optional fund is necessary.
Also, let us explore the significance of cooperative statutory funds. Having clear cut guidelines in its utilization will definitely help achieve established vision, mission and goals.
By: Lotes P. Lab-oyan