OpenAI has decided that its nonprofit division will retain control over its for-profit organization, after the company initially announced that it planned to convert to a for-profit organization.
According to the company, OpenAI’s business wing, which has been under the nonprofit since 2019, will transition to a public benefit corporation (PBC). The nonprofit will control and also be a large shareholder of the PBC.
“OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit,” OpenAI Board Chairman Bret Taylor wrote in a statement on the company’s blog. “Going forward, it will continue to be overseen and controlled by that nonprofit.”
OpenAI says that it made the decision “after hearing from civic leaders and engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California.”
“We thank both offices and we look forward to continuing these important conversations to make sure OpenAI can continue to effectively pursue its mission,” Taylor continued.
OpenAI was founded as a nonprofit in 2015, but it converted to a “capped-profit” in 2019, and was trying to restructure once more into a for-profit. When it transitioned to a capped-profit, OpenAI retained its nonprofit wing, which currently has a controlling stake in the organization’s corporate arm.
OpenAI had said that its conversion, which it argued was necessary to raise the capital needed to grow and expand its operations, would preserve its nonprofit status and infuse it with additional resources to be spent on “charitable initiatives” in sectors such as healthcare, education, and science. In exchange for its controlling stake in OpenAI’s enterprise, the nonprofit would reportedly stand to reap billions of dollars.
Techcrunch event
Berkeley, CA
|
June 5
BOOK NOW
Many disagreed with the proposal, including early OpenAI investor Elon Musk, who filed a lawsuit against OpenAI opposing the company’s planned transition. Musk’s complaint accuses the startup of abandoning its nonprofit mission, which aimed to ensure its AI research benefits all humanity.
Musk had sought a preliminary injunction to halt OpenAI’s conversion. A federal judge denied the request, but permitted the case to go to a jury trial in spring 2026.
A group of ex-OpenAI employees and Encode, a nonprofit that co-sponsored California’s ill-fated SB 1047 AI safety legislation, filed amicus briefs several weeks ago in support of Musk’s lawsuit. Separately, a cohort of organizations, including nonprofits and labor groups like the California Teamsters, petitioned California Attorney General Rob Bonta to stop OpenAI from becoming a for-profit, claiming the company had “failed to protect its charitable assets.”
Several Nobel laureates, law professors, and civil society organizations had also sent letters to Bonta and Delaware’s attorney general, Kathy Jennings, requesting that they halt the startup’s restructuring efforts.
The stakes were high for OpenAI, which needed to complete its for-profit conversion by the end of this year or next or risk relinquishing some of the capital the company has raised in recent months, according to reports. It’s unclear what consequences may befall OpenAI now that it’s reversed course.
In a letter to staff on Monday also published on OpenAI’s blog, CEO Sam Altman said he thinks OpenAI may eventually require “trillions of dollars” to fulfill its goal of “[making the company’s] services broadly available to all of humanity.”
“[OpenAI’s nonprofit] will become a big shareholder in the PBC in an amount supported by independent financial advisors,” wrote Altman. “[W]e are moving to a normal capital structure where everyone has stock. […] We look forward to advancing the details of [our] plan in continued conversation with them, [our partner] Microsoft, and our newly appointed nonprofit commissioners.”
