There is no way here to make one rule that can apply equally well to all possible situations.
The current rule is, in my opinion, a fine balance between protecting the CFC/Champions and protecting the organizer.
So what if it happens once in a while that some of the CYCC entry fees get spent on an attached event. The organizer would be within their rights to just pay themselves that money, would you prefer they did that? The same rule that allows them to do that allows a smaller or more out-of-the-way city to actually have a chance at running a CYCC without a massive potential loss.
Christopher Mallon
FIDE Arbiter