That may be so, but don't we want a company like newman's own to exist and do good in the world? Maybe they shouldn't exist under the current tax regime, but it's not the company that's in the wrong but rather the system that it operates under.
That can enable, among other things, vast abuses by companies that set up charities just to act as a front for private businesses to shield profits from high tax brackets. The charity still has to distribute a certain modest percentage of their assets per year, and that pales in comparison to paying 30% or more in taxes.
So you set up Burger Charity (or call it McDonald's Charity), which owns BurgerStand USA (operating restaurants). BurgerStand generates profit and kicks it back to Burger Charity almost entirely tax free. Burger Charity uses the tax free proceeds to accumulate vast amounts of real estate, which it then leases to BurgerStand (at an artificially cheap rate made possible by the low tax structure, providing a competitive advantage) for restaurant locations. Then they can do the same for equipment in the restaurants as well (Burger Charity owns the equipment and leases it to BurgerStand at an artificially low rate). Perhaps you set up Burger Equipment Corp that you own, and Burger Land Holdings Corp that you own, they all work with BurgerStand USA (the profits of which all kick back to Burger Charity mostly tax free). Cycle and repeat for an astounding tax avoidance scheme that provides a blatantly unfair advantage to an entity willing to abuse the charity approach.
You're entirely missing the point. The point is that our tax laws should be written in a way to enable an entity like Newman's Own to operate without enabling the many abuses you describe.
People have this naive view that tax law is insanely complex and full of loopholes for fun and/or profit. It isn't. It's largely because well intentioned people tried to do a "right thing" for some specific circumstance and unintended consequences made the outcomes wrong. So you plug two holes when there's an outcry but 2 months later some other politician has a great idea and accidentally makes three new ones.
personally outside of individual and religious groups I don't see why others should be excused from taxation for being charitable. businesses get name recognition for their activities and it should be part of being a good corporate entity instead of a payoff
Lunacy of Friedmanism aside, most corporations maximize value to shareholders by being pro-social.
That said, if you are in the situation of setting up a foundation (unlikely, you have to be rich) you should probably force it to spend down to zero in ~20 years. That way you can the best assurance that the foundation doesn't change focus to something you would oppose.
And that's exactly the reason why there's a Byrd amendment - it blocks the income arriving at the foundation via foundation owning private companies tax free.
If so, you could set up two companies. One is the charity, the other is the for-profit. The for-profit has to give much of their profits away, but they're still allowed to be as capitalistic as they want to be, and the charity doesn't need to own them.
On the other hand, I don't know if such an arrangement could ever be legally binding.