Question

Define cooperative organisation. Explain any three features of cooperative organisation.

Answer 1

A cooperative organisation is an association of persons, usually of limited means, who have voluntarily joined together to achieve a common eco­nomic end through the formation of a democratically controlled organisation, making equitable dis­tributions to the capital required, and accepting a fair share of risk and benefits of the undertaking.

The following are the characteristic features of a cooperative organisation as a form of business organisation:

1. Voluntary Association:

A cooperative so­ciety is a voluntary association of persons and not of capital. Any person can join a cooperative soci­ety of his free will and can leave it at any time. When he leaves, he can withdraw his capital from the so­ciety. He cannot transfer his share to another person.

2. Spirit of Cooperation:

The spirit of coop­eration works under the motto, ‘each for all and all for each.’ This means that every member of a co­operative organisation shall work in the general interest of the organisation as a whole and not for his self-interest. Under cooperation, service is of supreme importance and self-interest is of second­ary importance.

3. Democratic Management:

An individual member is considered not as a capitalist but as a human being and under cooperation, economic equality is fully ensured by a general rule—one man one vote. Whether one contributes 50 rupees or 100 rupees as share capital, all enjoy equal rights and equal duties. A person having only one share can even become the president of cooperative society.

4. Capital:

Capital of a cooperative society is raised from members through share capital. Coop­eratives are formed by relatively poorer sections of society; share capital is usually very limited. Since it is a part of govt. policy to encourage coopera­tives, a cooperative society can increase its capital by taking loans from the State and Central Coop­erative Banks.

5. Fixed Return on Capital:

In a cooperative organisation, we do not have the dividend hunting element. In a consumers’ cooperative store, return on capital is fixed and it is usually not more than 12 p.c. per annum. The surplus profits are distrib­uted in the form of bonus but it is directly connected with the amount of purchases by the member in one year.

6. Cash Sale:

In a cooperative organisation “cash and carry system” is a universal feature. In the absence of adequate capital, grant of credit is not possible. Cash sales also avoided risk of loss due to bad debts and it could also encourage the habit of thrift among the members.

7. Moral Emphasis:

A cooperative organisa­tion generally originates in the poorer section of population; hence more emphasis is laid on the de­velopment of moral character of the individual member. The absence of capital is compensated by honesty, integrity and loyalty. Under cooperation, honesty is regarded as the best security. Thus co­operation prepares a band of honest and selfless workers for the good of humanity.