OpenAI will remain a nonprofit despite restructuring into a public benefit corporation

OpenAI, the artificial intelligence pioneer led by Sam Altman, has announced it will maintain control of the organization as a nonprofit.

The company revealed it is restructuring into a public benefit corporation, but will not go the for-profit route as feared by civic leaders and former employees.

After discussions with the attorneys general of California and Delaware, OpenAI detailed its plans today. The board chairman Bret Taylor said: “With the structure we’re contemplating, the not-for-profit will remain in control of OpenAI.”

The restructuring will see a subsidiary limited liability company become a PBC, which would allow employees, investors and the nonprofit to hold equity. However, Taylor wouldn’t say what stake the nonprofit would have, but it’ll be a majority.

Altman, who has been involved in ongoing legal disputes with OpenAI’s co-founder Elon Musk, said he was pleased both entities would share the same mission. He said they’d be focused on fulfilling it, amid the backdrop of the lawsuits. Musk is currently competing with his own startup xAI to become a leader in the AGI space and is opposed to OpenAI becoming a for-profit.

OpenAI was recently valued at $300 billion in a funding round led by SoftBank and including Microsoft. However, its efforts to restructure have faced challenges, most notably from Musk who attempted to buy OpenAI for $97.4 billion last year.

OpenAI has had a hybrid structure since 2019 when it established a capped-profit limited partnership. The controlling shareholder has been the nonprofit.

Concerns about the restructuring plans were raised in a letter from a coalition of ex-employees, Nobel laureates and civil society groups. They warned that a shift to for-profit would undermine OpenAI’s charitable purpose and governance safeguards.

While Taylor did say there would be a separate board for the PBC, he said the nonprofit would appoint its directors. That means the mission remains the priority.

In a letter to employees today, Altman said: “The world has changed since we started OpenAI in 2015 and we need to adapt our structure to meet this moment. We believe that achieving our mission will require substantial resources and we are committed to doing what it takes to ensure AGI benefits all of humanity.”