What is a Cooperative - How do you make it work?
Definition of a Cooperative
A cooperative is controlled by their members who are a group of people who own and control the organization together. They cooperative work together to meet their shared economic, social, and cultural needs through a business that they jointly own and control.
The members must abide by the cooperative principles because they jointly own and democratically control it.
People create cooperatives with a specific intention in mind, aiming to achieve their aspirations through joint cooperative development.
These associations promote cultural needs and aspirations and are governed by the Cooperatives Act, 14 of 2005.
Frequently asked questions
What are the characteristics of cooperatives?
- They cannot be established by one person
- They must have a mutual and common need
- Goals should be met more economically through a co-op
- All members should benefit from the co-op
Must a co-op be audited?
Yes. They must be audited. Co-ops can however apply to be exempted under s55 of the Act. This is if the audit costs would affect the financial sustainability of the co-op.
What criteria must be met for a co-op to be exempted from an Audit?
- Audit costs should impact the financial sustainability
- Co-ops must maintain adequate financial records
- Co-op must be able to produce annual financial statements
- The members should have adequate protection of their interests
What are cooperatives in business?
Persons align to meet their common economic goal and share in the rights to make decisions in autonomous associations called cooperatives.
What types of cooperatives are there?
- Primary - Main objective is to provide employment to the members and to facilitate community development.
- Secondary - Formed by 2 or more primary co-op to provide services to members.
- Tertiary - Consists of members who are secondary co-op whose objective it is to engage organs of state, the private sector and other stakeholders.
What are the benefits of a cooperative?
- Improved bargaining power
- Improved purchasing power
- Able to access other market opportunities as access becomes possible in numbers
- Ability to obtain products and services that were previously out of reach
- Reduction in cost and a resulting increase in income because of persons united voluntarily to achieve a common economic social goal
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