OpenAI to Stay Under Nonprofit Oversight Despite For-Profit Restructuring Plans
OpenAI has announced it will retain its nonprofit governance structure even as it moves forward with plans to reshape its for-profit subsidiary in order to attract new investment.
The decision comes amid intense public scrutiny and ongoing legal disputes, including a lawsuit from Elon Musk, who co-founded the organization and now accuses it of veering away from its original mission to develop artificial intelligence that serves the public good.
In a blog post on Monday, the company said its nonprofit parent will continue to oversee operations while becoming a major stakeholder in the for-profit unit, which is being restructured as a public benefit corporation. This setup aims to strike a balance between raising capital and staying aligned with the company’s ethical goals.
“We chose to keep nonprofit control after discussions with civic leaders and consultations with attorneys general in California and Delaware,” OpenAI said. The organization also confirmed it is working closely with key partner Microsoft and newly appointed nonprofit board members to finalize the updated structure.
Originally, OpenAI had proposed transforming its for-profit arm into a public benefit corporation to expand its fundraising capacity. That idea sparked concerns about whether the nonprofit could maintain oversight and ensure that AI development remained socially responsible.
Board chair Bret Taylor described the updated model as being “very similar” to the existing framework, while CEO Sam Altman called it a workable compromise that still satisfies investors. “It works well enough for investors to continue supporting us at the level we believe we’ll need,” he said.
In recent months, OpenAI has sought to secure as much as $40 billion in new funding, led by SoftBank and based on a potential $300 billion valuation. That fundraising was expected to hinge on a shift to a for-profit structure, though it is now unclear how the revised governance model may affect investor appetite. Neither SoftBank nor Microsoft have commented publicly on the latest update.
Some analysts have raised doubts about the nonprofit retaining control. Gil Luria of D.A. Davidson noted that nonprofit oversight might limit the company’s ability to raise aggressive capital, as potential backers could be deterred by limited profit-sharing prospects.
OpenAI’s unique structure gained global attention in late 2023 when its board removed Altman, citing trust issues and poor communication. The decision was reversed within days after a wave of support from staff and investors led to his reinstatement.
