Is it an unrelated business income or an extension of ministry (mission). This is an important question to answer for the federal, state and municipal governments. At stake for these taxing bodies is of course, income, property and sales tax. And there's another stakeholder: small businesses who often raise the unfair competition challenge when a nonprofit is operating in their space.
This is the question NPR's Market Place raised today when referring to the faith-based in-church fitness centers most frequently populating the US southern states (many Southern Christian churches in particular). As Market Place pointed out, these church-housed fitness centers are located on tax-exempt property. The churches even argue that these facilities are extensions of ministry where center personnel offer fitness/training assistance along with ministerial-type assistance.
But some States have ruled the fitness centers of YMCAs and Yoga Centers in particular as not meeting the "church" or nonprofit status and subsequently leveling property taxes. The argument: that these were not necessarily faith centers and more importantly, that access was not restricted to faith members. Interestingly, the church fitness centers do not restrict access either.
For me, I think consistency is the most critical element. If Fitness Centers are indeed deemed unrelated ventures (which I tend to believe) then they should be taxed. Perhaps the IRS needs to be more helpful to the states and cities on what exactly is an unrelated activity.