Charles Ponzi ingenuously devised an investment scheme in the 1920’s where he promised unbelievably high returns (up to 26% interest) to prospective investors. The system is quite simple. He pays his investors from the money paid by other investors. He doubled their money in a short period of time. This turned out to be fraudulent however, and Ponzi went to prison. But his “innovative” scheme became irresistibly enticing and seductive that others perpetuated it over the years up to this time. It has become what they call the Ponzi Scheme.
You can place your money to wherever you think it can earn or to where it is safe. It is your money after all. Besides, I do not claim to be knowledgeable in financial matters (We have financial advisers found in the opposite page of my column). As a co-op advocate however, I promote co-ops. It may not offer fantastic profits like Ponzi but it has, at least, potential earnings higher than what the banks can offer. Every co-op is good unless it has officers whose only motivation is to satisfy their own selfish interests and greed. The co-op principles and concepts are designed in such a way that it is aimed to improve the economic lives of its members. It is for the small people who do not have the opportunity to understand sophisticated high finance such as the stock market and mutual funds.
Privileges and benefits afforded to cooperatives abound under the Cooperative Code such as tax exemption, priority in market stall rentals, etc. But co-op members have their own distinct benefits. In the co-op, you can earn in at least three or four ways. So this is where we will set our focus on.
What business model allows you to earn every time you borrow money? What legitimate business model can provide an interest on your share capital higher than the banks (except mutual funds and those shady Ponzi schemes that double your money faster than lightning)? What company or corporation that does not tax your earnings and allows you to be in equal standing with another member who has more share capital contribution? What business establishment can give cash incentives and other non-monetary tokens when you attend General Assembly Meetings?
As far as I know, only a co-operative allows you to earn and profit from your own borrowings. I don’t know of any other financial provider or intermediary that provides what they call a Patronage Refund. It is called as such because this is a refund for the member who patronizes the services or product of the co-op. However, not all members shall be entitled to this benefit. It is supposed to be for those deserving members who are good payers and for those who regularly avails the services of the co-op.
Your share capital contribution is entitled to a reasonable interest. Corporations call it dividend. Co-ops call it interest on share capital. Most co-ops can afford to give an interest higher than the banks and even way higher that it beats the inflation rate. That is why, if the rumors are accurate, people who are investing and depositing in some best performing co-ops are increasing. Unfortunately, there are also rumors that people are borrowing millions from banks and co-ops in order to invest in one of those Ponzi schemes. Deposits in co-ops, by the way, are exempt from the 20% final tax being charged by the banks on interest.
Successful co-ops even pay their members plus a reimbursement of their transportation expense when they attend the General Assembly Meeting. In addition, members will also receive tokens such as umbrellas, T-shirts, bath towels, blankets, etc. Members will also have a chance to win expensive prizes at stake such as refrigerators, washing machine, TV, and even real properties. You may also receive a cash incentive (over and above the patronage refund), which you will get in cash or be added to your share capital, when you are a good payer or just being a model member.
Even with your minimum share capital contribution, you can still have the same rights and privileges (except of course of the interest you will be receiving) with that of someone who paid a much bigger capital contribution. You will still have the same number of vote regardless of the share capital.
There you are, the benefits are endless. There are many ways to earn in the co-op. With these, I am convinced that co-ops could really be the preferred business model by year 2020 as predicted by the International Cooperative Alliance.
Meanwhile, your thoughts and opinions are welcome. You can write this paper or email me at email@example.com for a profitable exchange of ideas. Lastly, may we take this Holy Week to reflect on ourselves and come out of it a better person, with better attitude and with a more positive outlook in life.