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Watchdog Group Targets YMCAs

WASHINGTON — Citizens Against Government Waste (CAGW), the nation's largest taxpayer watchdog group, released its latest Through the Looking Glass Report: YMCAs: From Community Service to Community Disservice. The report, the third in a series that identify how certain non-profit organizations jeopardize tax dollars, is a tale of two failures — the failure of some chapters of the Young Men's Christian Association (YMCA) to adhere to their charitable purpose, and the failure of the federal government to enforce the tax laws.

The report stated that: “When a local YMCA decides to build a state-of-the-art fitness center in affluent communities instead of providing programs for underserved individuals and families, the organization is deserting the very elements of the entire community that it is legally bound to serve. When the federal government, in particular the Internal Revenue Service (IRS), does not impose unrelated business income tax (UBIT) on such YMCAs, it forces hardworking Americans to pay more than their fair share of taxes.”

“The IRS must begin to collect UBIT from the non-compliant YMCAs and require that each YMCA facility adhere to its non-profit mission,” CAGW President Tom Schatz said. “Otherwise, YMCAs will continue to flock to affluent residential areas, low-income communities will fail to be served, unfair competition in the fitness market will go unchecked, and hardworking taxpayers will continue to pay more than their fair share of taxes.”

IHRSA, which has taken on the tax status of the YMCA for some time, applauded the report.

“It is encouraging that a respected independent tax watchdog organization such as CAGW, has come to the conclusions that they have. The report stresses that tax exemption is a privilege not a right. It is not enough for any non-profit to simply say that they earn their tax exemption every day, you actually have to do it. Selling fitness services to affluent adults is a business,” said Kevin F. Buckley government relations manager for IHRSA. “I think anyone who takes time to look at the facts of this issue instead of listening to the rhetoric that is tossed around will come to the conclusion that the YMCAs engaged in a commercial activity. CAGW has asked legitimate questions that need to be addressed.”

“YMCA of the USA found the CAGW article defamatory and full of factual errors and misconceptions about the nature of charity and the mission of the YMCAs,” said Arnold Collins, associate director/media relations for YMCA of the USA. “We have asked for a retraction. Mr. Middleton never contacted us in writing these articles nor has he or the editor of CAGW Government Waste Watch responded to our rebuttal as of Oct. 1st.”

The CAGW report recommends:

  • The IRS should clarify its “community accessibility” standard, which simply says that all non-profit recreational facilities must be made available to either a charitable class or the entire community;

  • The IRS should compel YMCAs that do not meet the appropriate standards to pay UBIT;

  • The IRS should form a taxpayer compliance review committee to monitor YMCAs and other non-profit organizations; and,

  • The IRS should formalize a procedure for reporting abuse, so small businesses can inform the agency of violations

TAGS: Nonprofits
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