Taxpayer Watchdog Says YMCAs Are Flouting Their Mission

By Susan Jones | July 7, 2008 | 8:21 PM EDT

( - A taxpayer watchdog group accuses the YMCA of moving from community service to "community disservice," and it says the IRS should be doing something about it.

Citizens Against Government Waste this week released a report saying the YMCA has failed to stick to its charitable purpose by building state-of-the-art fitness centers in affluent communities - rather than providing programs for "underserved" communities.

The CAGW report also criticizes the federal government for failing to enforce the tax laws as they apply to the nonprofit YMCA.

According to CAGW, "When the federal government, in particular the Internal Revenue Service, does not impose unrelated business income tax (UBIT) on such YMCAs, it forces hardworking Americans to pay more than their fair share of taxes.

"These YMCAs are free to compete unfairly with for-profit fitness facilities, taking away customers and driving them into financial distress."

CAGW President Tom Schatz said the IRS must begin to collect UBIT from noncompliant YMCAs and require that each YMCA facility stick to its nonprofit mission.

"Otherwise," Schatz said in a statement, "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."

Among other things, CAGW recommends that the IRS clarify its "community accessibility" standard, which says nonprofit recreational facilities must be available to either a charitable class or to the entire community.

It also wants the IRS to form what it calls a taxpayer compliance review committee to monitor YMCAs and other nonprofit organizations.

Citizens Against Government Waste says it is dedicated to eliminating waste, fraud, abuse, and mismanagement in government.