Reflections on Statutory Fund of Cooperatives (Part 1)

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All cooperatives are required to allocate and distribute funds after determining the net surplus of the cooperative annually. Article 86 of the Philippine Cooperative Code provides for the order of distribution. This include 10% allocation for reserve fund (50% for newly registered cooperatives for the first 5 years of operation); maximum of 10% for education and training fund; minimum of 3% for community development fund and maximum of 7% for optional fund.

Our visits to different cooperatives indicated that not all cooperatives have written plans and programs on how to spend their education and training fund-local.  Some cooperatives are also hesitant to remit the education and training fund due to federations and unions for unknown reasons.

As part of cooperative growth, I would like to propose that every cooperative should come up with education training plan or program. Most cooperatives prepare annual plan and budget. However, there is a need for details on how much budget for the training of officers; management and staff; members and the community.

A quick survey on the perception of some cooperatives related to education and training indicated lesser trainings on the part of staff and members. Can we attribute this to regulatory issuances wherein the focus of training is more on the officers?

As a tip, it is encouraged that cooperatives identify trainings intended for members, officers and staff as basis in coming up with training plan or program. It would be better if a training needs analysis would be prepared to aid the education committee in preparing the plan.

After determination of priority trainings for officers, members, staff, and the community, preparation of budget for each training requirement follows. The fund source shall be from the allocated education and training fund-local. Since most cooperatives rely on invitations from training providers, I suggest that if not affiliated, cooperatives need to affiliate with federations or unions. One option to encourage more participants to join is to conduct the training on site. Invitation of trainers from apex federation or union to conduct the said activity in close coordination with the education committee and officers of the cooperative. For micro cooperatives, they can tap the services of the Cooperative Development Authority personnel as part of the handholding activities. Cooperatives can also tap some training providers as they offer free trainings to selected affiliates especially those under micro category.  As the training required for officers are being required, all officers and staff must undergo the following minimum training requirements: Fundamentals of Cooperatives, Governance and Management, Credit Management (for those with credit operations), Financial Management, Risk Management and Internal Control System. Equally important are other trainings deemed necessary in the business management.

Many cooperative leaders are satisfied with compliance to the minimum requirements and I cannot question that. The challenge is not on the compliance but the readiness of officers, management staff, and members to perform their functions given the increasing complexities of business operations. If officers and management think they have all the facts in their fingertips, then why bother to go on trainings if only for compliance sake?

Let us learn from the experiences of fast growing cooperatives that recognize the importance of being equipped with the right information and technology used in decision-making. They invest in molding their personnel by sending them to attend various trainings. To some reactive cooperative leaders, training is an expense but to proactive ones it is an investment.

Here are some questions for cooperatives. Are cooperative officers and staff willing to part with their allocated education and training fund for the growth of their cooperatives? Are fund kept for other purposes contrary to its purpose? Is the attendance to trainings intended to improve business operations or purposely for selected few as a form of control? Why do some cooperatives find difficulty in remitting the funds due to federation or union? Are there separated funds for these purposes?

The answers to the questions can be both positive and negative. Our purpose in providing the different questions is to tickle the minds for reflection. If cooperatives want to grow, everybody must be willing to learn through trainings or exposure to other cooperatives. There is also a need for wise utilization of funds in accordance with existing guidelines and provisions of law.

I congratulate cooperatives that make use of their education and training fund in accordance with approved plans and programs. To be holistic in our approach to cooperative development, let us involve officers, staff and members in trainings. Also, let us explore and educate the public on the significance of cooperatives out of the CETF. Use of CETF- local and remittance of due to federation and union is necessary. The practice when done regularly can become a cycle that promotes development based on trust.

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