Guest column: The YMCA is more like a business than a charity

  • Wednesday, January 18, 2017 1:30am
  • Opinion

This letter is in response to the letter Jan Richardson wrote in the Jan. 4 Sequim Gazette.

Mr. Richardson brought up some interesting and perhaps, concerning points. I want to first thank Jan for his service as a Clallam County Park and Recreation District Commissioner and as a SARC board member. I also want to state here, that as a fitness studio owner, I support the fact that a swimming pool is in the public interests and is something that no private business could viably provide in a town of Sequim’s size. That is why many smaller towns have public pools, but they typically stop at just a pool since most other needs can be met by private businesses. It isn’t in the taxpayers’ best interests to duplicate services that the private sector can adequately provide.

There are some concerns though including the Clallam County Opportunity Fund’s $731,000 grant for an air handling unit, the far below market lease rate the YMCA is paying and the unintended consequences the YMCA creates for other fitness businesses.

As background, the YMCA is a nonprofit 501(c)(3) charity organization with a mission “To put Christian principles into practice through programs that build healthy spirit, mind and body for all.”

About $731,000 that directly benefited the Sequim YMCA came from the Clallam County Opportunity Fund’s grant which came from local sales taxes and a state fund. Public money was used so a private corporation can lease a 35,000-square-foot public facility for $20,000 annually. That lease rate equates to about 57 cents a square foot per year.

In comparison, Sequim businesses are typically paying $10 to $15 per square foot or more annually for their leases. For what the YMCA is paying, you could only lease about 1,000 to 2,000 square feet in most of Sequim. It isn’t in the taxpayers’ interests to lease the facility they paid for at such an absurdly low rate.

In 2014, the YMCA was one of the top 10 richest charities in the US, with a total revenue of more than $6.6 billion; with more than $605 million coming from the government.

Many YMCAs now operate more like a business than a charity by selling adult fitness. They are directly competing with local fitness facilities for the same classes, clients and instructors. Because of this, there are unintended consequences.

During SARC’s closing, the local gyms adjusted their programs, building spaces and number of instructors in order to continue to provide local gym opportunities to all of the displaced SARC members. Perhaps a blessing in disguise in the short term, however, since the opening of the Y, the wave of members and instructors have returned to the Y leaving the locally owned gyms scrambling to once again adjust.

For-profit businesses do not have the luxury of municipal support, federal grants or community levies. Their business adjustments must come out of their business or personal reserves.

As a business owner, if the YMCA just had memberships for the pool, racquetball court and gymnasium, I would not have a problem with that. The majority of the YMCA’s revenue comes from membership sales. Fully 78 percent of YMCA revenues come from selling memberships, not from donations. About 65 percent of YMCA members pay to use the YMCA exclusively for fitness services just like the customers of tax paying health clubs.

(Research conducted by the University of New Haven Management of Sports Industries and Facility Management Department and by American Sports Data, Inc., whose 2002 Health Club Trend Report is based upon a national sample of over 15,000 surveys. Summarized in “Fair Competition Annual Report 2003” by the International Health Racquet Sports Association.)

Truly charitable activities should remain tax-exempt, but the YMCA’s adult fitness revenue should be taxed. Existing tax law supports this conclusion; selling subsidized fitness to adults who can pay their own way subverts the purpose of tax exemption. The Unrelated Business Income Tax or UBIT states that any business income that a charity earns that is not related to a charitable mission is taxable.

If the YMCA wants to act like a business, it should pay taxes like a business.

I strongly support the traditional definition of charity — giving a helping hand to those who truly need it. That’s why my studio supports several well deserving organizations in town financially, including the Boys &Girls Club, the Irrigation Festival, the Sequim Lions Club, KSQM, the Sequim Calvary Chapel, Welfare Animal Guild, Olympic Peninsula Humane Society, Volunteer Hospice of Clallam County, the Relay for Life Cancer Walk and the American Lung Association.

As a tax exempt charity directly benefiting from public funding and a ridiculously low lease on a facility the public paid for, the YMCA should not be competing so directly with other businesses. I would suggest that the community discuss a long-term strategy where the YMCA thrives and the locally owned gyms continue to provide specific exercise programs where both sides are not competing for the same clients but rather enhancing the health and wellness program opportunities in the county.

Pauline Geraci owns and operates a Fit4Life fitness studio in Sequim.

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Don C. Brunell is a business analyst, writer and columnist. He recently retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at thebrunells@msn.com.
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