OpenAI to Retain Nonprofit Oversight Amid For-Profit Shift

OpenAI will transition its for-profit arm into a public benefit corporation to maintain mission alignment while unlocking full investment potential, company executives announced Monday.

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The San Francisco-based artificial intelligence research behemoth will still be controlled by its nonprofit, while the shift to a public benefit corporation will help OpenAI balance social impact with growth akin to other organizations like Anthropic, X.ai and Patagonia. The restructuring will help OpenAI’s tools reach everyone, not just those who can pay the most or those closest to Silicon Valley, CEO Sam Altman said.

“We want to put incredible tools in the hands of everyone,” Altman wrote Monday. “We are amazed and delighted by what they are creating with our tools and how much they want to use them. We want to open source very capable models. We want to give our users a great deal of freedom in how we let them use our tools within broad boundaries, even if we don’t always share the same moral framework.”

Altman said new corporate governance models will replace OpenAI’s “complex capped-profit structure,” giving stock to employees and investors but retaining strategic oversight through the nonprofit.

Critics believe OpenAI’s transition to a for-profit PBC structure – particularly one supported by $40 billion in investment – represents a commodification of intelligence that undermines the original philanthropic foundation. In an April letter to regulators, critics and former OpenAI staff argued that OpenAI’s mission to serve humanity can’t coexist with incentives to deliver financial returns (see: AI Experts Urge Regulators to Block OpenAI’s Profit Pivot).

“OpenAI has a bespoke legal structure based on nonprofit control,” they wrote in a letter to California Attorney General Rob Bonta and Delaware Attorney General Kathleen Jennings. “This structure is designed to harness market forces without allowing those forces to overwhelm its charitable purpose.”

Do Public Benefit Corporations Provide Necessary Safeguards?

OpenAI’s nonprofit will retain oversight and major shareholding in the new public benefit corporation, which Altman said will preserve the organization’s independence and values while allowing OpenAI to operate at the scale required to support global AGI development. Altman and Chairman Bret Taylor said OpenAI’s existing “capped-profit” system was designed for a different, less competitive AGI landscape.

“The nonprofit will control and also be a large shareholder of the PBC, giving the nonprofit better resources to support many benefits,” Taylor wrote on OpenAI’s website Monday. “Our mission remains the same, and the PBC will have the same mission. We made the decision for the nonprofit to retain control of OpenAI after hearing from civic leaders and engaging in constructive dialogue.”

Delaware’s PBC law doesn’t oblige companies to publicly report how they are fulfilling their public benefit goals, which critics say opens the door to mission drift with no accountability mechanisms. Replacing the independent board and strict return limits of a capped-profit model with a traditional stock-based for-profit model creates conflicts of interest and could compromise impartial governance (see: Safety Concerns, Pushback Against OpenAI’s For-Profit Plan).

“The public interest would be harmed by a safety-focused, mission-constrained nonprofit relinquishing control over something so transformative at any price to a for-profit enterprise with no enforceable commitment to safety,” nonprofit Encode wrote in December 2024.

Altman said the evolution in OpenAI’s structure will allow the organization to fund safety initiatives needed to keep pace with the rapid advancement of AI in areas like alignment research, transparency initiatives like Model Spec and processes like red teaming to manage potential harms. Altman said a new internal committee has been formed to oversee safety and security decisions company-wide.

“As AI accelerates, our commitment to safety grows stronger,” Altman wrote in a letter to OpenAI employees Monday. “We want to make sure democratic AI wins over authoritarian AI.”

Will Forgoing Capped-Profit Structure Harm OpenAI’s Independence?

Former OpenAI researcher Jan Leike said OpenAI’s “safety culture and processes have taken a back seat to shiny products,” adding that the disbanding of the super alignment team was seen as proof that short-term product success is being prioritized over long-term safety.

Encode worries that OpenAI’s fiduciary obligations to investors will eclipse focus on long-term existential risk mitigation.

“If the world truly is at the cusp of a new age of artificial general intelligence, then the public has a profound interest in having that technology controlled by a public charity legally bound to prioritize safety and the public benefit rather than an organization focused on generating financial returns for a few privileged investors,” Encode wrote in December.

Altman said the transition to a public benefit corporation is necessary to unlock trillions in future funding since the scale of compute, infrastructure and deployment needed to bring AGI to the world is beyond the reach of traditional nonprofit fundraising. Transitioning to a PBC will allow OpenAI to adopt a more sustainable capital strategy that ensures long-term progress and allows the organization to meet demand, he said.

“Instead of our current complex capped-profit structure – which made sense when it looked like there might be one dominant AGI effort but doesn’t in a world of many great AGI companies – we are moving to a normal capital structure where everyone has stock,” Altman wrote to OpenAI employees Monday. “This is not a sale, but a change of structure to something simpler.”

SoftBank’s $30 billion investment in OpenAI is contingent on the transition to a for-profit model, which critics see as evidence that investor demands – rather than mission needs – are driving this transition. They argue that OpenAI’s commitment to public good is increasingly symbolic when the company now sits alongside ByteDance and SpaceX in valuation rankings.

If OpenAI was allowed to operate as a for-profit company, Encode said in December the organization’s “touted fiduciary duty to humanity would evaporate, as Delaware law is clear that the directors of a PBC owe no duty to the public at all.”