ALLOCATION OF NET SURPLUS

The net surplus of a cooperative cannot be construed as profit right away

thus, it cannot be distributed to the members in any manner the cooperative
desires. The surplus will be considered as excess payments of members for loans
made and for goods and services patronized. Distributions of these excesses to the
members will be considered as returns of their payments. Thus, as a rule, only
members can receive patronage refunds. But before the surplus is returned to the
members, it has to be allocated to different funds first in accordance to the Code
and the Principles of Cooperatives. The order will be the:
1.
2.
3.
4.

Reserve Fund
Education and Training Fund
Optional Fund
Remaining Net Surplus

Only the remaining net surplus is given to the members. The net surplus of the
cooperative shall be determined at the end of the year unless the by-laws provide
for a different date. The tables below discusses each of the items enumerated
above.