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Paying the Price of the Failure to Retain Legitimacy in a National Charity: The CORSO Story

Victoria University Centre for Accounting, Governance and Taxation Research Working Paper No. 47

31 Pages Posted: 10 Aug 2008 Last revised: 13 Aug 2008

David Sutton

Victoria University of Wellington

Carolyn J. Cordery

Aston University; Victoria University of Wellington - School of Accounting and Commercial Law

Rachel F. Baskerville

Victoria University of Wellington - School of Accounting and Commercial Law

Abstract

The Council for the Organisation of Relief Services Overseas (CORSO), established in 1944, was dedicated to the relief of poverty overseas. It was a New Zealand organisation which acted to co-ordinate the activities of different national bodies; all of whom shared a vision of working towards such relief of the poverty. CORSO's primary vision for such relief being organised "under one umbrella" attracted 50 member organisations by 1967. Legitimacy theory provides an undemanding theoretical frame for early CORSO. It also explains the period of crisis in relation to reduced legitimacy when, in the 1960s, CORSO began to focus increasingly on development to build foundations for impoverished peoples overseas to gain greater self-reliance. This change in strategic direction was insufficiently communicated to the general public, though it was generally accepted within the organisation.

From the 1970s the increased politicisation of society impacted on CORSO's membership, and Maori radicals became prominent in CORSO along with "leftist" individuals and groups. The early strong coalition was progressively replaced with divisiveness from the mid-1970s amid growing public mistrust of CORSO; as it changed from an apolitical body to one increasingly focused on issues from an anti-capitalist stance. Polarisation and the subsequent consequences are similar to other not-for-profit coalitions.

Deterioration in budgeting was concomitant with CORSO's declining Appeal proceeds. Without suggesting a central role for accounting in CORSO's decline, the correlation of robust or deficient accounting processes respectively with economic good and poor health appears positive. Until the late 1960s, evidence indicates a robust accounting process which subsequently deteriorated, from the 1975 Treasurer's Report onwards. In examining CORSO's decline from 1970, until its "functional death" in 1991, the causes of this decline provide a valuable illustration of the importance of political independence and integrity for charitable organisations' survival.

The data for this study is derived from primary and secondary sources including newspaper articles, annual reports, correspondence and opinion surveys. This research also analyses accounting data, evidencing a correlation of robust or deficient accounting processes respectively with economic excellent or poor health. To this extent the accounting data provides a "bio-marker" of organisational health.

Key to CORSO's demise was a change in strategic direction brokered by governing members which resulted in a philosophical shift unsupported by many of its core orthodox member bodies, with 'fatal' consequences. CORSO from 1990 was not a broad-based coalition, but survives as a persistent, yet impaired, brand name employed by a small coalition of socialists and Maori radicals. CORSO failed to erect barriers to capture, or to recognise it. This historic perspective on the demise of such a giant in New Zealand charities provides a clear illustration of a failure to sense and adapt sufficiently to its dynamic political landscape, and illustrates how the not-for-profit sector is more dependant than other sectors on continuing legitimisation processes in its implicit contract with the society to which it offers its vision.

Keywords: M40, H40, L29

JEL Classification: CORSO. charity, New Zealand, Muldoon, accountability

Suggested Citation

Sutton, David and Cordery, Carolyn J. and Baskerville, Rachel F., Paying the Price of the Failure to Retain Legitimacy in a National Charity: The CORSO Story. Victoria University Centre for Accounting, Governance and Taxation Research Working Paper No. 47. Available at SSRN: https://ssrn.com/abstract=1199522 or http://dx.doi.org/10.2139/ssrn.1199522

David Sutton

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

Carolyn J. Cordery (Contact Author)

Aston University ( email )

Aston Business School
Aston Triangle
Birmingham, B4 7ET
United Kingdom

Victoria University of Wellington - School of Accounting and Commercial Law ( email )

Faculty of Commerce and Administration
PO Box 600
Wellington
New Zealand

Rachel F. Baskerville

Victoria University of Wellington - School of Accounting and Commercial Law ( email )

Faculty of Commerce and Administration
PO Box 600
Wellington
New Zealand
006444636951 (Phone)
006444635076 (Fax)

HOME PAGE: http://www.victoria.ac.nz/sacl/staff/rachel-baskerville.aspx

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