OpenAI has reversed its initial plans to transition into a for-profit organization, announcing that its nonprofit division will continue to manage the company’s business operations. The company stated that its business arm, which has operated under nonprofit status since 2019, will now transition into a public benefit corporation (PBC), with the nonprofit division becoming the major shareholder and controller of the PBC.
Bret Taylor, Chairman of OpenAI’s board, emphasized in a statement on the company’s blog, “OpenAI was founded as a nonprofit, and it has been overseen by that nonprofit to this day. Going forward, it will continue to be overseen and controlled by that nonprofit.”
This decision follows discussions between OpenAI’s leadership and government officials, including law enforcement agencies. Taylor added, “We thank the Attorneys General of both California and Delaware, and we look forward to continuing these important conversations to ensure OpenAI can continue its mission effectively.”
Founded as a nonprofit in 2015, OpenAI shifted to a "capped-profit" model in 2019, retaining its nonprofit division to raise capital and expand its operations. After this shift, the nonprofit division became the controlling shareholder of the commercial arm of the company.
OpenAI had stated that maintaining its nonprofit status would help it secure additional resources for charitable initiatives in fields like education, healthcare, and science. The company also indicated that the nonprofit-controlled transition would result in billions of dollars in profit.
However, many, including Elon Musk, opposed this transition. Musk argued that OpenAI had abandoned its original mission to ensure AI research benefits all of humanity. He filed a lawsuit to halt OpenAI’s shift to a for-profit model, but the court denied his request. Former OpenAI employees and several nonprofit organizations also filed legal briefs opposing the conversion.
Following this decision, OpenAI CEO Sam Altman noted that the company may eventually require “trillions of dollars” to achieve its goal. Altman also clarified that the nonprofit division would hold a significant share in the PBC and that this plan would be supported by independent financial advisors.
OpenAI has stated that more details on these changes will be released in the future and that it plans to continue advancing its partnership with Microsoft and working with newly appointed nonprofit commissioners.
