On the southeast side of Omaha, NE, on land once occupied by companies in Omaha’s fabled meat-packing industry and largely populated by lower-income people, sits a gleaming, two-year old, 122,000-square-foot building that draws praise from community developers, charitable groups and thousands of members, while working some fitness club owners into a hot, frothing sweat.

Omaha’s Salvation Army Ray and Joan Kroc Corps Community Center—known locally as the Kroc Center—is one of 27 such facilities either already built or in the planning and construction stages nationwide. All are made possible due to a $1.5 billion posthumous donation by Joan Kroc, widow of McDonald’s founder Ray Kroc, to the Salvation Army in 2003. In Omaha, as at other Kroc Centers throughout the country, the stated mission of the centers is to provide a comprehensive community center, supported in part by the community, where children and families would be exposed to different people, activities and arts that would otherwise be beyond their reach. Kroc Centers are patterned after the initial Kroc Center in San Diego, which Joan Kroc funded and helped design and build while still alive. San Diego’s Kroc Center sits on 12 acres and includes an ice arena, gymnasium, three pools, rock-climbing walls, a performing arts theatre, an Internet-based library computer lab and a school of visual and performing arts.

Supporters exult in the opportunities and activities that Kroc Centers provide that are beyond the economic and physical reach of lower-income residents near each center. Detractors see a resplendent new fitness center coming into their cities, cloaked in the patina of philanthropy and all the good works for which the Salvation Army has historically been known.

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SWIM OR LIFE LESSONS?

On a bright, sunny and unseasonably balmy December day, the sound of children splashing and playing in the water cuts through the steamy, chlorinated air of a bustling Omaha Kroc Center Aquatic Center. Madeline Moyer, business services director for the center, says this is the sound of play and exercise that would be out of reach for most if not all of the children in the pools if not for the Kroc Center. Some two-thirds of the children come from minority or lower-income families within three to five miles of the center, she says.

Few fitness facilities are in the neighborhood. Bob’s Fitness Center and a Curves facility are within a mile, but neither offers aquatics, although a YMCA four miles from the Kroc Center does.

“We must serve an underserved community, and we do,” Moyer says. “We must be affordable and attainable for people to get here.”

Moyer grew up in South Omaha, not far from the Kroc Center. The area around the center has for some time been economically challenged, she says, adding that at least one resident has told her the center is a “beacon of hope” for the community.

“We are really offering life skills here,” she says about the swim lessons offered at the aquatics center, citing a study commissioned by USA Swimming that found nearly 70 percent of African-American children and nearly 60 percent of Hispanic children do not know how to swim. “If you are a minority and you did not learn how to swim—and I am one of those so I can say this—learning to swim removes a huge fear factor. In addition, we are providing greater opportunities for these children. What if you are a child who doesn’t know how to swim and you get invited to a children’s swim party?”

Outside the pool, the center offers programs for seniors, youth and adults that traditional commercial fitness clubs are less likely to offer, she says, including core and strength training for seniors, a “healthy home” project to promote healthy living lifestyles and a computer lab equipped with 50 donated computers.

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PHILADELPHIA’S STORY

Halfway across the country and two years after the Omaha facility was built, a newer, larger and more expensive Kroc Center opened in North Philadelphia late last year. Salvation Army Major Timothy Lyle calls his new center a “super community center,” citing not only a “fabulous aquatics center” but also spaces for workshops, workouts, worship and wellness.

“Before we opened, we did a survey of a three-mile radius around us,” Lyle says, referencing an area of North Philadelphia described as ‘a hollowed-out, industrial pockmark’ by the Philadelphia Inquirer in a story about the center’s opening. “There were no other fitness centers around us, no YMCA or anything like that. I have not heard much from the commercial centers wanting to be here. This neighborhood has never had access to anything like this.”

Lyle estimates that only 20 percent of the center’s floor space is dedicated to fitness. Large sectors of the center are focused on public meeting spaces and areas for worship and education, including classes in critical thinking and basic life skills for adults, computer use and technology for seniors, and conflict resolution for those of all ages.

“I’m a pastor,” Lyle says. “I don’t run fitness and aquatic centers. I’ve been running Salvation Army Centers in churches for years, from New York to Chicago and Atlanta to California. But we want to address the body, mind and spirit. Part of it is having a fitness center where people pay to be part of it.”

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FITNESS PALACE

The fact that Kroc Centers have a fitness component at all is a sticking point to some, though.

Patrick Grimm, co-owner of Titletown Fitness in Green Bay, WI, does not hold back when talking about the Kroc Center that opened in his city in August 2011.

“It’s a total crock,” Grimm says. “They are hiding behind their nonprofit status, saying we are all about kids, all about communities, and the for-profit sector is getting killed because we cannot go out and get donations, cannot get free money to build a giant fitness palace to compete against the private sector.”

Although his club lost a couple hundred members to the Green Bay Kroc Center, Grimm contends that fitness clubs are not the only ones facing unfair competition: the Kroc Center’s lazy river water park competes with the Tundra Lodge Hotel’s water park, its banquet halls compete with local bars, restaurants and clubs, and its offer of musical lessons and free instruments compete with music stores.

Grimm says he cannot understand how the Kroc Centers are in any way central to the Salvation Army’s stated mission.

“What the Salvation Army is supposed to do is get its funding and use its tax status to get donations to help people,” Grimm says. “Don’t go ringing your red bell and ask for any donations to build a $30 million professional fitness center when you could have put the money to real charitable uses such as clothing, food and shelter.”

John Miller, co-owner of Courthouse Athletic Club in Salem, OR, in which a Kroc Center opened in October 2009, couldn’t agree more.

“The Salvation Army has completely lost their way on this thing,” Miller says of Kroc Centers. “If the Kroc widow had given the money without strings attached, they would have built homeless shelters and food banks, and it would have been fantastic.”

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Instead, Miller says, the Salvation Army now has “one foot in the ministry world and one foot in the club business.”

“To their credit, the Salvation Army really is ministry-oriented,” Miller says. “The YMCA wants to be in the club business—they just don’t want to risk any money to do it. The Salvation Army wants to be in ministry, but everyone is telling them to run this commercial enterprise and to be in this industry. A house divided will not stand.”

Miller also shares Grimm’s lament about the Salvation Army’s (and thus Kroc Centers’) tax-exempt status and proclamations of all the good they do for the community.

“I think I do a lot of good for the community when I write my property tax check that the YMCA and the Salvation Army doesn’t,” Miller says, “but I don’t get to wear the white hat and claim all these great things I’m doing with that money.”

One also finds strong opinions about the Kroc Center in Coeur d’Alene, ID, opened in April 2009. Salvation Army Major John Chamness, executive director of the Coeur d’Alene Kroc Center, stresses his organization’s dedication to Salvation Army mission directives, while noting that fitness—and in particular aquatics—are key elements to his center.

Although Coeur d’Alene may not seem at first blush to be as “challenged” an area as the tougher parts of Chicago, Boston or Philadelphia, the region has significant socioeconomic issues of its own to deal with, Chamness says.

“Coeur d’Alene has this image as a resort community, and yet over 50 percent of the kids in our school district qualified for school lunches,” he says. “We also have one of the highest suicide rates in the country, way above the national average. So we looked at it, and it became apparent that the community could benefit from and use a Kroc Center.”

The facility offers special programming geared specifically to the challenges faced by the Coeur d’Alene community, he says, including cooking, gardening and budgeting classes as well as grief relief classes. The facility hosted a conference on bullying and a school district public forum on suicide, which is a significant issue among Coeur d’Alene high school students, he says.

“We want to complement what the for-profit fitness centers do,” he says, “and maybe offer things they would not.”

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The aquatics center is perhaps the most important element in the Coeur d’Alene Kroc Center. Prior to getting the Kroc Center, the town of 45,000 people had about 30 existing fitness facilities but no public pool, so the need for aquatics was not being met, says Gary Retter, managing partner in three for-profit health and fitness clubs in the Coeur d’Alene area called the Peak Health and Wellness Centers. A vote to build a community center that would house a pool was voted down by taxpayers. Thus, when the Kroc Center opportunity arose at only a fraction of the cost the city had previously proposed to spend, it was too good to pass up, Retter says.

Retter was on an advisory committee that helped bring the new Kroc Center to the city. Even though Coeur d’Alene is the smallest town to get a Kroc Center, Retter says, it was wise to apply for, accept and build a Kroc Center, just not exactly the one it got.

“They did a great job of putting their grant [application] together,” Retter says, “but what they planned to do compared to what was eventually built was so very different. It started as being all about kids and seniors, but now they have every bit as big a weight room as any private facility in town.”

Retter refers to the Coeur d’Alene Kroc Center as “a $36 million fitness facility surrounded by a community center,” and says the biggest problem is that it “is so overbuilt that they can hardly financially sustain it.” That, he says, has forced the center to raise dues. The increase in dues and the focus on children at the Kroc Center has caused some of the members that his club lost to the Kroc Center to return to his club, he says.

“There are a lot of kids over there, and we have become more of an adult facility,” Retter says.

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BOON OR BOONDOGGLE?

With 17 Kroc Centers already open and 10 more on the drawing board, and with differing local economies and community needs across the country, some Kroc Centers (and their locations) inevitably will raise more eyebrows than others.

“Lots of nonprofits follow the money,” says Rick Caro, president of Management Vision, a New York-based company that has consulted in both the for-profit and nonprofit fitness center worlds. “If the grant money is there or the land is available, sometimes the full rigor of market research is not done. And even if there is not a perfect match between marketplace needs and what they are providing, the nonprofits will say, ‘We are doing a lot of good here, so it doesn’t matter.’”

Caro also warns that not-for-profit clubs—and in particular Kroc Centers—face challenges in both finding the right leaders and in defining what they are.

“You might be able to run a for-profit fitness center well, but can you meet the needs and fill the other purposes of these community centers?” he asks. “Also, what are you? It is like that game animal-vegetable-mineral. You are part library, part community center, part fitness center.”

Education and better communication between nonprofit and for-profit clubs may be a way for each to understand the other better, Caro says, and perhaps work in ways that benefit both. Nonprofit clubs, he contends, can and should try to meet marketplace needs that for-profit clubs are not meeting, and for-profit clubs could benefit from offering services to wider ranges of people, such as using workout or exercise rooms that sit idle in off-hours for education classes.

Tom Rhind, president of Power Wellness, a company that also consults with and works with both for-profit and nonprofit centers and currently works with several Kroc Centers in the Northeast, says that management of both for-profit and nonprofit centers should look closely at Kroc Centers, whether they already have one in their city, anticipate one in the future or just want to know more about what this relatively new entrant is doing in the community center and fitness club space.

“It’s easy for people to say it is an unfair advantage,” Rhind says, “but if they see it, they will see otherwise.”

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Citing Kroc Centers he has worked with in Boston and Philadelphia, Rhind credits the Salvation Army for putting Kroc Centers in areas with high poverty rates and in the toughest urban neighborhoods where for-profit commercial clubs do not exist. He also dismisses the claim that Kroc Centers (in the largest cities at least) are stripping away potential members from other clubs.

“In Philly, the Kroc Center is right near downtown, but the downtown crowd is not coming in,” he says. “They are still going to their own fitness center.”

On whether Kroc Centers have an unfair advantage due to their tax status, Rhind reiterates that the centers he has worked with are all in economically disadvantaged neighborhoods and serve a local population that most for-profit fitness clubs are either not interested in or would not find profitable enough to succeed. Some of the areas are so difficult, he says, that local Kroc Center employees should be celebrated for their work and dedication to the centers.

“The Kroc employees are coming into a challenging area, too,” Rhind says. “I will take anyone who says this is unfair competition on a personal tour of any of these Kroc Centers to show them how wrong they are in thinking that way.”