US Coins

Why is ANA Board retreating to hide endorsement value?

It appears the elected leadership of the American Numismatic Association is retreating to a cloak of secrecy rather than maintaining the mantle of transparency many individually proclaimed they would uphold when seeking election to the Board of Governors.

As our news story on Page 4 reports, the ANA Board announced in late December that it had signed a new five-year contract extension with Certified Collectibles Group that designates Numismatic Guaranty Corp., Paper Money Guaranty and Numismatic Conservation Services as the ANA’s official grading and conservation services.

Since the contract was not competitively bid and the same grading firm has had a similar, exclusive contract for the past 16 years, it was not surprising to learn that the contract would be extended to 2017.

What is surprising is that the ANA Board decided not to disclose how much money the collector organization will receive for the paid endorsement.

When asked by Coin World, ANA President Tom Hallenbeck reported the board had decided not to disclose the monetary value of the contract, despite the fact that such information has been disclosed for all such previous contracts. His reason: Disclosure may in some way negatively affect future contract negotiations.

Upon further questioning, Hallenbeck indicated the matter of disclosure was entirely up to the ANA. Nothing in the contract binds the board to secrecy nor had CCG demanded such.

The board’s decision to keep the monetary aspects of the contract secret tends to raise questions as to whether ANA’s “brand” is losing value. Is the paid endorsement worth less now than in past years?

The fact that it’s all about the money has never been a secret.

Back in 1995 when the ANA decided to endorse a commercial grading service in return for a fee, then Executive Director Robert J. Leuver was candid in explaining the decision: ANA needed to replace the money it had been receiving for ANACS, the grading service it sold to Amos Press Inc. in 1990. ANA’s noncompete contract with Amos Press Inc. and royalty payments from Amos Press ended July 31, 1995.

For a decade prior to the sale, ANACS had been the collector organization’s cash cow. Poor ANA management of the service that collected a fee for its grade opinions, along with the rise of competing commercial third-party grading services in the late 1980s, forced the ANA out of the grading business.

Since 1995, ANA has — based on information made public — received more than $3.2 million in cash plus a host of services provided by CCG’s grading and conservation divisions. From a business perspective, the decision to go the paid endorsement route has proven lucrative.

However, the ANA enjoys a very special status. It is one of two organizations chartered by Congress. (The American Red Cross is the other.) The ANA’s federal charter states that the organization is to “advance the knowledge of numismatics along educational, historical and scientific lines in all its various branches....” In addition the charter highlights acquiring and disseminating “trustworthy information” as among the ANA’s major responsibilities.

The ANA also has standing as a nonprofit organization.

Given the ANA’s leadership role in both the hobby and the numismatic marketplace, ANA’s leaders should strive to be open and transparent in areas such as paid endorsements. The 28,000 members of the ANA as well as the consuming public should be advised that the grading service that is allowed to market itself as the organization’s official grading and conservation service is paying for the right to make such claims. And the amount the grading/conservation service is paying should also be made public.

In recent years the ANA seemed to be righting its ship and sailing in sunshine. To suddenly retreat to secrecy would indicate it is drifting into troubled waters. ¦

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