Welcome to softilmu, a simple blog that shares knowledge with sincerity. This time we will discuss about cooperative. Some of the main topics are Definition of Cooperative, Cooperative Principle, Functions and Objectives of Cooperatives, Cooperative Capital, Organizational Tools, and Types of cooperatives. Immediately yes, hopefully the article can be useful.
Linguistically, the word cooperative comes from the English language, namely “cooperation” which means joint effort. In general, a cooperative is a collection of individuals or business entities that carry out business activities on the principle of kinship and aim at the welfare of their members. Meanwhile, officially, the definition of cooperatives according to Law no. 25 of 1992, Cooperatives are business entities consisting of individuals or legal entities, cooperatives based on their activities based on cooperative principles as well as a people’s economic movement based on the principle of kinship.
Based on this understanding, we need to pay attention to several things, namely:
  • Cooperatives are legal entities, meaning that they have laws that regulate their activities. Now the elements of a cooperative legal entity are regulated in Law No. 25 of 1992 concerning Cooperatives.
  • Cooperatives base their activities on the principles of cooperatives. This means that the principles of cooperatives are the identity and characteristics of cooperatives, this principle is a unity that cannot be separated from one another. We will explain the cooperative principles in the points below.
According to Article 5 of Law No.25 1992, the Principles of Cooperatives are as follows:
  • Membership is voluntary and open
  • Democratic Management
  • Distribution of the Remaining Operating Results (SHU) fairly, proportional to the amount of business services of each member
  • Remuneration is limited to capital
  • Independence
  • Cooperative Education and Training
  • Inter-Cooperative Cooperation
  • Concern for the community


Cooperative functions are as follows:
  • As an Important Center for the Indonesian Economy
  • As an Effort to Democratize Socio-Economic Indonesia
  • Improving the Welfare of Members and Society
  • Participate in building the national economic order to create an advanced, just, and prosperous society based on the legal basis of the state.

Cooperatives are expected to be able to achieve their goals, which are as follows (in article 4 of Law No. 25 of 1992):

  • Build and develop the economic potential or capability of members in particular and society in general to improve their economic and social welfare.
  • Participate actively in efforts to improve the quality of human life and society.
  • Strengthening the people’s economy as the basis for the strength and resilience of the national economy with cooperatives as teachers.
  • Strive to realize and develop the national economy which is a joint effort based on the principles of family and economic democracy.


In discussing a business entity, we must also discuss the income from the business entity. Now cooperative capital is the input of cooperative resources both from within and from outside. Cooperative capital is divided into three main groups, namely:

1. Own Capital

Capital itself is an income that comes from members or activities of the cooperative itself in accordance with the provisions of the cooperative. Equity includes Principal Savings, Mandatory Savings, Reserve Funds, and Grants.

  • Principal Savings, namely the funds that must be paid by each member when he/she becomes a member. The amount of money that must be paid by each member is the same, there is no difference. As long as the party concerned is still a member, the principal cannot be taken back.
  • Mandatory Savings, namely the funds that must be paid by members of the cooperative within a certain time. The amount does not have to be the same for each member, maybe each party concerned has to pay a different amount according to the rules. Mandatory savings cannot be taken back as long as the person concerned is still a member.
  • Reserved fund, namely the amount of money obtained from the allowance for Remaining Operating Results (SHU). The Reserve Fund continues to be stored and used to accumulate capital or compensate the cooperative if necessary.
  • Grant, namely income originating from the contribution of certain parties in the effort to develop cooperatives. Grants cannot be distributed to members as long as the cooperative has not been dissolved.

2. Loan Capital

As the name implies, loan capital is capital that comes from loans. Loan capital can be in the form of loans from members, other cooperatives, banks, or other financial institutions.
Equity Participation is investment or investment from outside parties who are not members of the cooperative, for example from the private sector, government or from individuals.
In order to achieve its goals, cooperatives must of course have a good organizational structure so that their functions run well, therefore cooperative organizational tools are needed, namely as follows:
Through the members’ meeting, many things will be determined, namely:
  • Articles of Association
  • General policies in the field of cooperative business organization and management
  • Election, appointment and dismissal of supervisors and administrators
  • Planning and reporting related to all cooperative activities
  • Distribution of the remaining operating results (SHU)
  • Merger, Consolidation, or dissolution of Cooperatives

b. Manager

From the results of the meeting, a board of directors will be selected for the cooperative, the duties of the board include:
  • Responsible for the cooperative and its business
  • Submitting a draft work plan, revenue budget, and cooperative expenditure
  • Responsible for financial reports and performance reports
  • Holding member meetings
  • Maintain a list of board members

c. Supervisor

Based on the agreement of the members’ meeting, supervisors from the cooperative are also elected. Supervisory duties include:

  • Supervise the implementation of policies and management of cooperatives
  • Make a written report on the results of observations and supervision


1. Based on the number of business fields:
  • Cooperatives that only have one line of business (single purpose), for example, savings and loan cooperatives that only serve in terms of saving or borrowing money.
  • Cooperatives that have several business units (multi-purpose), for example a village unit cooperative in a village that provides several goods/services.

2. Based on its function:

  • Consumption Cooperative, is a cooperative that was established with the main objective of meeting the needs of its members. In this cooperative, the members are the final consumers. Goods sold in consumer cooperatives must be cheaper than other places because the main purpose of cooperatives is to improve the welfare of their members.
  • Service Cooperative, is a cooperative that has a function to provide services or services to members in particular and the surrounding community in general. An example of this type of cooperative is a savings and loan cooperative that provides money lending and storage services, of course with lower interest rates than other places.
  • Production Cooperative, is a cooperative whose activities are selling goods produced by its members. This means that members of a production cooperative are producers who produce an item. The role of the cooperative is to sell and distribute the goods produced by its members so that the cooperative’s goal to prosper members is achieved.
  • 3. Based on the level and area of ​​activity:
  • Primary Cooperative, is a type of cooperative that stands alone and its members are at least 20 individuals.
  • Secondary Cooperative, is a cooperative formed from a combination of cooperative bodies. Secondary cooperatives have a much wider range of activities than primary cooperatives. Secondary Cooperatives can be further divided into:
  • Central Cooperative, namely cooperatives consisting of a combination of at least 5 primary cooperatives.
  • Joint Cooperative, namely cooperatives consisting of at least 3 central cooperatives. This means that it consists of at least 15 primary cooperative bodies.
  • Parent Cooperative, namely cooperatives consisting of at least 3 joint cooperatives. This means that a minimum of 45 primary cooperatives, or a minimum of 9 central cooperatives.

So that’s the discussion in our article this time entitled Definition, Principles, Objectives, and Types of Cooperatives. Hopefully the knowledge can be useful for friends. If there is still something you don’t understand, please ask via the comment box below. We will try to respond quickly and appropriately. Thank you for visiting, don’t forget to like and comment. J