Mission Drift’ Identification Of Rural Funding Cooperative Organizations

The rural funding cooperative organizations provide loans for vulnerable groups in the rural financial market to ease farmers’ financing difficulties. But with the increasing number and scale of rural funding cooperative organizations and the diversity in development in recent years, there have been some problems. In order to achieve the financially sustainable development, some rural funding cooperative organizations have a tendency to deviate from the service for the farmers, and breaking through the geographical scope to absorb members. The rural funding cooperative organizations provide deposit and loan services to non-members, issuing large loans, and weakening cooperation and mutual assistance. How does scaling up affect the mission of rural funding cooperative organizations? In other words, studying whether rural funding cooperative organizations are in the mission drift or not has important practical significance for the sustainable development of rural funding cooperative organizations.This paper is on the basis of the theory of collective action and mission drift, and uses study method of the case on the rural funding cooperative organizations in the L town of Yancheng city. This paper tries to establish a research method, designed from the five properties of agriculture, cooperation, regional, membership and risk-controlling, to investigate whether the rural funding cooperative organizations are in the mission drift when scaling up. The conclusions are as follows:1. With scaling up, the loans of the rural funding cooperative organizations remain used for rural, agriculture, farmers.It has no mission drift.The loans are centralized in medium and higher earners.The poorer people are excluded, thus reducing efforts for agriculture. 2. With scaling up, from the financial indicators, the rural funding cooperative organizations have no drift mission in the risk control, but have a problem of high concentration in large loans. Once default, it will bring a great loss to the unions.3. With scaling up and the increase number of members, the "free-rider" members will increase in the number who have little attention on the development of the unions.This weakens the power of the democratic management, loses balance of the supervision of the organization.With the expansion size of assets, fund management costs will rise, and the funds are invested to some high-risk industry, and large loans are issued, strengthening loan concentration and increasing risk, leading to the profit motivation. The rural funding cooperative organizations have a cooperation drift.4. With scaling up, the rural funding cooperative organizations break through the restrictions of the geographical scope, providing loan services. It will lose the information superiority. The moral hazard and adverse selection will increase the union’s operational risk.The unions have the regional service drift.5. With scaling up and the profit motive enhancement, the rural funding cooperative organizations tend to provide services to non-members, and the guidance from the core members will reduce, and the satisfaction of every member will reduce. The organizations are deviating from the union’s members.Through the article’s analysis, the scale of the rural funding cooperative organizations will bring much influence to the development of the organizations. It will bring a certain degree drift of the organization’s mission; weaken the information advantages, and deviate from the nonprofit purpose of organizations. So in the development of the rural funding cooperative organizations, it must stick to appropriate scale management.