Min Eduok
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Cooperative Financial Profit Model.
How do cooperative societies make their financial profit?Cooperative societies make their financial profit through the sale of goods and services to their members. They may also earn income through investments and by providing financial services to their members. Profits are then distributed among the members in proportion to their level of participation in the cooperative. In contrast to traditional businesses, cooperatives operate for the benefit of their members rather than for the benefit of outside shareholders.
Explaining further
Cooperative societies are owned and controlled by their members, who are also customers of the cooperative. Members pool their resources and work together to achieve common goals, such as buying goods and services at a lower cost or selling their products at a higher price. Profits made by the cooperative are distributed among the members in proportion to their level of participation in the cooperative, rather than being distributed among outside shareholders.
For example, a consumer cooperative may operate a retail store that sells goods to its members at a lower price than they would pay at a traditional retail store. The cooperative earns a profit from the sale of these goods, and that profit is distributed among the members in proportion to their purchases from the store. Similarly, a worker cooperative may earn profits from the sale of goods or services produced by the cooperative, and those profits are distributed among the members in proportion to their participation in the production process.
Cooperatives also make profits through investments and by providing financial services to their members. These profits are also distributed among the members. Cooperative societies are known for their democratic governance, one member one vote, transparent, and open decision-making process. It helps to create an equitable distribution of wealth among the members.
