REVISITING THE SOCIAL GOALS OF COOPERATIVES

Romulo M. Villamin
Institute of Cooperative Studies
(Philippines)

Cooperatives have social goals. These are an integral part of their nature and purpose. When a
cooperative declares in its vision statement that it is committed to improve the quality of life
of its members and the community, it is expressing these goals.
Mission statements of most cooperatives also promise to deliver quality products and services
to members in order to make them productive members of society. When they succeed in
doing this, they achieve their social goals.
Society expects from cooperatives no less. Not least because they count among their
membership the lower income sectors of the population. In fact, most cooperatives
acknowledge that many, if not the majority, of their members are poor.
These are the people that the cooperative law, Republic Act 9520, clearly had in mind when it
referred to cooperatives as a practical vehicle for promoting self-reliance and harnessing
people power towards the attainment of economic development and social justice.
This is why cooperatives go to the Cooperative Development Authority to register, not to the
Securities and Exchange Commission. This is why they are given special privileges under the
law, including exemption from taxes that other registered enterprises are required to pay.
This is so because, in the eyes of the law, cooperatives are different. They have a specific
purpose to fulfill in society, and that is to uplift the lives of people who would otherwise remain
marginalized and disadvantaged.
Ideal versus reality
This is the ideal. But is this the reality?
It is almost impertinent to ask this question except that not a few observers have noted some
apparent contradiction in cooperatives becoming ostensibly rich while most members have
remained poor. It is as if the image that big and successful cooperatives project to the public
are no longer consistent with the expectations that people have of cooperatives.
As these observers have also noted: how different are savings and credit cooperatives from
lending institutions that are proliferating in the market place, all wanting to get a piece of that
ever increasing household debt, never mind if this means pushing people to permanent
indebtedness?

All this suggests that it is not enough for cooperatives to define their success only in terms of
economic performance rising income, increasing loan portfolio, growing balance sheet, and
such external manifestations of growth as big buildings and number of branches. That success
has also to be supported by solid, evidence-based, social performance.
From a social performance perspective, it really does not matter how big the membership of
the cooperative is. What matters is how many of the members have improved the quality of
their lives because of it.
This is after all what the vision and mission statements of most cooperatives promise to
achieve.
Promise versus fact
Why the apparent gap between economic performance and the social performance expected
of cooperatives? Why the perceived contradiction?
Two answers can be advanced in addressing these questions.
First, there seems to be the unwritten assumption that by just being organized as a
cooperative, an enterprise already fulfills an economic and social function.
It may be argued that cooperatives, after all, are organized and registered as socio-economic
enterprises, with economic and social objectives written in their constitution and bylaws. They
are enterprises the ownership of which are open to people able to use their services, even
people of limited means. In other words, even the poor can be part-owners of the cooperative
enterprise. They gain access to economic services available to all members.
It can be taken for granted, therefore, that when the cooperative succeeds in its business, it
has already fulfilled its economic and social purpose.
There is nothing automatic about this, however. Just as the cooperative has to craft products
and services that meet the needs of members in order to achieve its economic objectives, so
too does it have to craft appropriate policies and strategies that can fulfill its social objectives.
In other words, it is not enough for the cooperative to serve the economic needs of members; it
has also to ensure that that service contributes to their well-being.
In practical terms, what this means is: when a loan is given to a member, the cooperative has to
ensure that that loan contributes to improving the life of that member.
Which leads us to the second reason for the apparent gap between economic and social
performance: Cooperatives tend to separate the economic objectives from the social
objectives. It is as if these two objectives are independent of each other. This has given way to
what can be described as CSR mentality among cooperatives.

In the corporate world, where profit is the primary reason for investing ones money, corporate
social responsibility is a mechanism for sharing part of that profit for the good of society. To be
sure, there are companies that are genuinely interested in giving back to society. But as one
businessman once said, CSR is good business. It promotes the good image of the company.
It is the same kind of thinking when cooperatives focus on making profit and give away part of
it in scholarships, medical missions, environmental projects, and various contributions to the
community. One hand gets and the other gives.
This thinking has made cooperatives no different, in principle and in fact, from other forms of
businesses. Unfortunately, this is how cooperatives are perceived right now by the public,
perhaps even by their own members.
In noting the apparent drift of some cooperatives towards the capitalist or investor-owned
forms of enterprise, Dr. Alexander F. Laidlaw in his book, Cooperatives in the Year 2000, wrote:
There are gnawing doubts about the true purpose of cooperatives and whether they are
fulfilling a distinct role as a different kind of enterprise. He may as well have written about
cooperatives in the Philippines at the present time.
A Call for Rebalancing
There is now a need to rebalance the economic and social performance of cooperatives. It
starts with the recognition that cooperatives have to achieve both economic and social
objectives, not one or the other. It is not the case of one set of objectives being more
important than the other. Neither is it a question of what comes first the economic or the
social? The cooperative has to achieve both and at the same time.
Going back to the point made about loans availed of by members. When such loans, or any
loan for that matter, are given to members, the cooperative has to ensure that those loans
ease the financial burden of members, or increase their income, or improve their productivity.
In other words, members become better off, economically and socially, because of the services
they receive from the cooperative.
Rebalancing implies a change in mindset on the part of coop officers, managers and staff. It is a
mindset that moves away from treating members like clients, and from engaging in purely
transactional relationship with them. It is a mindset that moves away from regarding loans as
purely a contractual arrangement between members and the cooperative. Rather, it is a
mindset that sees constructive engagement with members both as a challenge and a reward.
Rebalancing also implies a change in the cooperatives business strategy away from competing
with banks and other financial institutions by simply emulating what they do. Savings and
credit cooperatives will find a hard time matching the resources and capacity of the banks
(unless they acquiesce to becoming poor cousins of the bank). Rebalancing means recognizing
that the cooperatives unique strength comes from their very nature as value-based socio-

economic enterprises. And as a competitive strategy, they can differentiate themselves more
effectively by enriching their economic services with social value.
Perhaps it is time for coop officers, managers and staff to think of the economic goals and the
social goals of the cooperative as two sides of the same coin.