The advantages of cooperative is numerous and can be felt by both individual members and the community at large. A cooperative is also refer to as a co-op, it is a distinctive enterprise owned and democratically controlled by its members, to realize their common economic, social, cultural needs and aspirations of its members . It center on serving the needs of their member rather than maximizing profit compared to traditional business. It address a wide range of issue.
Some advantages of cooperative include:
1. Democratically Owned and Controlled
A cooperative is completely owned and controlled by members, this encourages participation and sense of belonging among all members. Leading to better decision-making, building good relationship with government in promoting interest of members and a more equitable distribution of profits.
2. Focus on Member Interest
Cooperative work towards the best interests of all members unlike traditional companies driven by shareholder returns. Cooperatives focus on the needs and benefits of their members. Individuals have a vital share in the outcome of a business effort, so everyone remain more productive and stays engaged with the required processes.
3. Access to Funding Opportunities.
Several cooperatives could be qualify to apply for specific grants to fund their operations. These financial awards don’t require a repayment plan, making it a useful option for startups who receive this money. The funding could be for agricultural cooperatives, worker cooperatives, housing cooperatives, education, technical assistance, and research.
4. Low Management Cost
In cooperative, members often share management duty and contribute to volunteer work. This reduces the need for a large payment of management team, reducing overall operating costs. Therefore, some fees are saved using the voluntary contribution offered by the members. They can leverage their collective buying power to negotiate better deals with suppliers, service providers and reduce operational cost.
5. Bring People Together as a Community
One of the advantages of cooperative is that it foster sense of community. For instance collective decision making creates a sense of belonging and joint responsibility, uniting individuals towards a common goal. As members work alongside to deal with challenges and achieve goals, they grow sense of shared purpose and unity.
6. Enlighten members
They organize workshops and seminars on important topics like cooperative principles, governance, financial capability, business skills, or market trends. Also, they ensure that members have access to information, updates on the cooperative’s activities, financial performance, and future plans that can benefit the members.
7. Corporate Social Responsibility
Once members start to recognize their collective and individual efforts with the organization, it foster performance and mutual problem solving also begins to take place. Since co-op operation is democratic, with members having voice in decision-making and access to financial information. This brings about transparency as a result there will be accountability and social responsibility initiatives will aligned with member values.
8. Economic benefits to it Members
Another advantage is that they offer economic benefit. Co-ops distribute profits amongst their members based on their contribution and also offer loans for effective functions to help members. Profits generated are either reinvested in the enterprise or returned to the members.
9. Reduces liabilities
The liability of the cooperative members is limited, however they are not immune from liabilities because they can incur debt or face legal challenges. In a cooperative, responsibilities and risks are often shared among members. Since cooperatives generally prioritize long-term sustainability over short-term profits. They tend to avoid risky financial practice because they focus on financial stability. Though this is not generally guarantee.
10. Government Patronage
Government can offer some forms of assistance to cooperatives, which include loans, grant and alleviation in taxation. They can also provide training programs, consulting services, or access to resources to help cooperatives build capacity and improve their operations. Likewise government can connect cooperatives with public procurement opportunities.
Why Cooperative is Important
- It better the society by provide employment, food and services, and improving social connection in the community they operate.
- Another importance is investment opportunities, collective development and even distribution of wealth,
- Cooperative operatives are critical to reducing poverty. particularly In developing countries cooperative structures allow communities to share their resources to solve problems, identify common goals and target the causes and symptoms of poverty.
- It is one of the tools in meeting the Millennium Development Goals
- Cooperatives limit individual risk and provide a way of shared productivity, decision-making and creative problem-solve
Cooperative empower individuals, strengthen communities, and contribute to a better future for all.
