The Not-for-Profit debate

The friction in this industry is impossible to ignore. On one side, commercial-club operators say that they are forced to do business on an uneven playing field. YMCAs and commercial clubs offer the same services, the operators explain, yet YMCAs enjoy the benefits of tax exemption. That, they argue, creates unfair competition.

YMCAs counter that they are community centers, not fitness clubs. They note that their facilities do more than build healthier bodies: They build healthier spirits and minds through programs that put Christian principles into practice, serving people of all incomes and abilities.

John McCarthy, IHRSA executive director, disagrees. He believes that Ys don't really serve people of all incomes. According to McCarthy, "rogue" Ys with fitness centers have forgotten their mission: They are concentrating their efforts in affluent communities, not in impoverished neighborhoods. And McCarthy is not alone in his thinking. Commercial clubs have already pledged more than $1 million to an IHRSA campaign designed to challenge the growth of tax-exempt fitness facilities in affluent communities.

David R. Mercer, national executive director of the YMCA, maintains that Ys do serve all communities. He claims that YMCAs nationwide raised $599 million in 1998 to aid the 16.9 million Americans (more than half of them children) whom they serve with "scholarships, subsidies and other services so that everyone who needs a Y can participate."

Mercer classifies commercial-club operators who criticize the YMCA as newcomers with a vindictive agenda against the 150-year-old organization. "Their vision is to weep and wail when YMCAs serve the community in a much more meaningful and more holistic way than they can dream of," he says.

In the state of Tennessee, however, the YMCAs in the community came under scrutiny when the State Board of Equalization examined 13 facilities operated by the YMCA of Middle Tennessee and concluded that "anything relating to health, fitness and recreational purposes of the YMCA should be considered noncharitable."

According to McCarthy, the board toured the 13 Ys and spent a total of 30 months determining whether the facilities primarily provided charitable services or competed with taxpaying fitness centers. In the end, the board concluded that "there is no factual disputing that the YMCA is in competition with the taxpaying health and physical fitness centers of Nashville and Middle Tennessee."

"The Y rhetoric would have you believe that they are immensely involved with youth and teenagers and the disadvantaged, but the reality, according to the State Board of Equalization, is quite the reverse," McCarthy says. "What the state board said is that the primary purpose of all these Ys is the provision of exercise facilities for the general public, not the provision of charitable services for the disadvantaged kids."

Mercer retorts that the board's conclusions overlooked the charitable acts of the YMCAs. "The recent staff report within the Tennessee State Board of Equalization is at this point no more than the short-sighted and non-binding opinion of just one person," he says. "It implies no state action or final determination. It fails because it fails to take note of the myriad of services performed on behalf of the community by the YMCA of Nashville and Middle Tennessee: services such as teen leadership and senior adult fellowship programs, academic enrichment for school-age children and prevention programs for at-risk youths - as well as youth sports and swimming lessons. In 1998, the YMCA of Nashville and Middle Tennessee provided $7 million in charitable subsidies, with one of every three members on financial assistance."

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