During a Federal Court face-off with the independently-run Cormack Foundation over the rights to its $70 million treasure chest, state party president Michael Kroger admitted membership had halved over three decades.

Membership sat between 18,000 and 22,000 in 1988, fading to just 10,000 paid and 3000 pending memberships at latest count.

"Regrettably the tide has gone out," Mr Kroger told the Federal Court on Monday.

He said the party bought "some software under previous director Mr (Damien) Mantach that has caused some trouble, but we believe (the current numbers) are accurate".

Mantach was jailed in 2016 for stealing more than $1.5 million using fake invoices from the party, putting it under financial pressure.

The Cormack Foundation was established by Liberal administrators to handle the initial $15 million proceeds from the sale of radio station 3XY in the late 1980s, during Mr Kroger's first stint as party president.

The Liberals are arguing a majority of Cormack directors, including former directors Hugh Morgan and John Calvert-Jones, held shares on behalf of the Liberal Party.

Mr Kroger acknowledged Cormack was run independently and could donate to other interests like the Liberal-aligned Institute of Public Affairs and Sir Robert Menzies Lecture Trust.

"There is a difference between ownership of the shares and decisions by the independent board to donate monies," Mr Kroger said.

However, Mr Kroger said he "could not tolerate" when Cormack donated to political parties that tried to defeat the Turnbull government.

Allan Myers QC, acting for Cormack, said the Liberals knew the foundation wasn't set up solely for the party's financial benefit and his clients have acted appropriately.

Mr Kroger told the court when the corporation was set up, he was advised to leave Mr Calvert-Jones to negotiate how the money should be handled with senator Sir Magnus Cormack and husband of senator Dame Margaret Guilfoyle, Stan Guilfoyle.

"I was mindful not to interfere because they were discussions between men who had known each other for a long time," Mr Kroger said in court.

And he was advised "a 30-year-old president inserting himself would not assist".

The court also has been told all references to the Victorian Liberal Party were eventually removed from Cormack's founding documents because it was feared if the political operation got control of all the money, it would spend it all.

The hearing continues.

Australian Associated Press