If the charity is a registered 501c3, then it needs a board, and that is more than 1 person.
If the charity is not a registered 501c3, then it is not a charity, and when you’re caught, you get fined and assessed for back taxes.
If the charity makes more than $50k it needs to file a 990. (Less than $50k a 990n that only reports the name of the board chair, and the amount of gross receipts).
I know there is this persistent idea that small charities are somehow a dodge, but it is generally private family foundation that are the dodge, and also the reason for the level of regulation that we have. The dodges get caught too.
Not sure about the USA, but what I heard from an accountant here in Canada - if Revenue Canada thinks the jobs for relatives or friends are bogus, if they are far beyond reasonable (that favourite lawyer word…) then they can attribute that income to the high-paid executive who set them up in the job. “I’ll pay my wife $200,000 to clean the office once a week” doesn’t work. A reasonable amount, yes; highway robbery, no. The accountant mentioned the case he knew where one son was a “sales consultant” pulling down a heft salary for essentially not even showing up to work. The income was reassigned to daddy who paid the top marginal rate on it… plus a penalty for tax fraud. of course, if the person is doing close to a real job and the salary is not too far out of line, then it’s just plain nepotism.
The Newman’s Own Foundation Form 990 indicates that substantially all of its approximately $35 million in income comes from No Limit, LLC an entity it controls. (See Schedule 4 on page 94 listing sources of “Other Income”).
Although the form discloses the income and expenses of the Foundation itself, it does not provide any disclosure on the expenses of the business entity that is providing its income.
If you look on page 100 of the return, you’ll see that it is one of 3 pass through organizations. These for-profit entities file their own returns with the IRS. Their financials are not required to be public, but I bet we could figure their profitability v sales with public information.
Paying executives/owners exorbitant salaries is a very poor way to avoid paying taxes. Those executive owners have to pay income taxes on those salaries, at currently higher tax rates than corporate income tax rates.
And paying royalties/licensing fees to another party results in the other party having to pay taxes on that income.
Transfer pricing strategies are not illegal, but are evaluated and scrutinized by taxing authorities on both sides of the transaction. Companies are required to provide documentation that the transfer price is within a reasonable band of arms-length transactions, meaning that even though the transfer of goods and services is between related parties, it should be valued at similar 3rd party market transactions.
I worked for a liquor distributor that overbilled itself for a maintenace contract and truck leases (same parent company). Whatever they saved in income tax, they ended up paying more in sales tax (plus $500k in fines and interest for not figuring use tax on the scheme). Companies do it. They get caught. Then they do it again.
As I mentioned upthread, one of the world’s richest men owns possibly the world’s wealthiest “charity” – The Stichting Ingka Foundation, aka IKEA (cite).
This kind of tax dodge – which is what it appears to be – is not always a small-time operation, easily shut down by regulators.