Cooperative is a special form of organization. So it differs from other major forms of organization as it in set up not to earn profit but to render service to its members.
The fundamental principles of cooperative organization are as
The membership of a co- cooperative society is voluntary. The individuals who have a common interest in a society can buy the shares and be enrolled as a member of the society.
All members of the society enjoy equal rights and status. Each share holder in a co-operative society has only one vote in the management of the business and no weight age is given to a member who owns more than one share. One man one vote is the guiding principle of a co- operative society.
The society is organized on the principles of democracy. So every shareholder has equal say in the affairs of the society. No members can dictate terms. The decision of the majority is binding on others.
Spirit of Co-operative
All the members of the society are to extend full co-operation in achieving the objectives of the society. There should be no ill-will hatred, jealousy among the members. So all for each and each for all should be the basic principle of a cooperative society.
The primary objective of a co-operative is to provide goods and service to the members at a price lower than the market. The profit at the end of year is distributed among the members on the basis of their transactions with the society.
The elected executive members of the society who manage the affairs of the society should be men of character and a symbol of honesty also.
The co operatives should have common confidence and belief in each other. Hence they should work like a team to accomplish the objectives of the society.
The members should try their utmost in avoiding wastes both in the purchase and sale of commodities. So the money spent economically and in the best interest of the society.
Payment of Dividend
A co-operative society cannot pay dividend more than 10% per annul to its members on the paid up share capital of the company. In case of consumers, co-operative society, the profit distributed among the members on the basis of individual purchases made by them in a trading year.
Sales on Cash
As the resources of the society limited, the society sells goods on cash basis only. Therefore No credit transaction entertained.
Prices of the Commodities
The society charges prevailing market prices of the goods from non member. However, the members of the society given discount on the goods purchased. The society earns only nominal profit from them.