OpenAI Changes Direction, Will Stay Under Nonprofit Oversight
The organization will continue to advance its plans to restructure its for-profit division to facilitate greater capital acquisition.
OpenAI, the entity behind ChatGPT, declared on Monday that it will uphold its nonprofit board’s governance over its extensive artificial intelligence operations worth billions.
As stated by Taylor, the determination stemmed from input received from civic leaders and discussions with the Attorneys General of Delaware and California, who hold oversight authority over OpenAI’s nonprofit status and could have intervened to prevent any alterations. OpenAI is registered in Delaware and based in San Francisco.
While the company has decided against eliminating nonprofit oversight, it will proceed with its intentions to restructure its for-profit arm into a Public Benefit Corporation (PBC)—a corporate model that enables entities to pursue profits while committing to a broader societal mission.
“The nonprofit will maintain control and will also hold a significant stake in the PBC, providing the nonprofit with enhanced resources to support numerous benefits,” Taylor explained. “Our mission remains unchanged, and the PBC will share that mission.”
Initially established in Delaware as a nonprofit controlling a for-profit entity, OpenAI operates under a “capped-profit” model that permits limited returns for investors and employees. Its foundational goal was to develop artificial general intelligence (AGI) safely and for the well-being of humanity.
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However, as the costs associated with developing models like ChatGPT escalated, the organization pursued alternative funding strategies to sustain its expansion. In December 2024, it revealed plans to transition its for-profit subsidiary into a Delaware PBC, raising concerns about equitable asset allocation between its divisions and adherence to its foundational charitable mission.
The proposed restructuring encountered backlash and legal challenges, including a prominent lawsuit from Elon Musk, a co-founder of OpenAI who left the organization prior to its rise in the AI sector. The world’s wealthiest individual claimed that OpenAI had violated its contractual obligations and committed fraud by straying from its original nonprofit vision.
“OpenAI is attempting to create AGI, but AGI development is not its primary mission,” the letter, led by Page Hedley, a policy and ethics adviser at OpenAI from 2017 to 2018, states. “OpenAI’s charitable objective is to ensure that artificial general intelligence serves all of humanity rather than promoting the private interests of any individual.”
