(Washington, D.C.) – With the recent announcement of $4 million in federal funds going to the YMCA of the USA, Citizens Against Government Waste (CAGW) once again questioned certain tax advantages that have helped YMCAs achieve a level of unfair competition and hurt taxpayers.

“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,” CAGW President Tom Schatz said.  “When the federal government, in particular the Internal Revenue Service (IRS), does not impose unrelated business income tax 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.”

In September 2003, CAGW released its Through the Looking Glass Report: YMCAs: From Community Service to Community Disservice as the third in a series that identifies how certain nonprofit organizations jeopardize tax dollars.  It is an examination of two failures: the failure of some chapters of the YMCA to adhere to their charitable purpose, and the failure of the federal government to enforce the tax laws.  The report can be found online at www.cagw.org/site/PageServer?pagename=reports_ymca.

“In addition to the recent funding, YMCAs across the country received $6.8 million in pork in fiscal 2004,” Schatz continued.  “Until the government enforces its tax laws, this amounts to nothing more than corporate welfare.”

The $4 million in funds was revealed earlier this month at the YMCA Activate America conference.  Secretary of Health and Human Services Tommy Thompson announced that $2 million in grants was awarded for the Steps to a HealthierUS initiative, designed to help Americans live longer by eliminating three risk factors: physical inactivity, poor nutrition, and the use of tobacco.  Sen. Tom Harkin (D-Iowa), ranking member of the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education (Labor/HHS), stated that the remaining $2 million was included in the fiscal 2005 Labor/HHS Appropriations Act, which has passed the House of Representatives, but has yet to be voted on in the Senate.  The money will be used for the Activate Program, designed to help cities develop programs to encourage wellness and prevent disease.

“Awarding these funds sends a message to other nonprofits that it permissible to skirt tax laws,” Schatz concluded.  “The IRS needs to solve this problem by clarifying its ‘community accessibility’ standards and require nonprofits that do not meet them to pay unrelated business income tax.”

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.