OpenAI says its nonprofit will remain in control of its for-profit business

ChatGPT maker OpenAI said Monday that its nonprofit will remain in control over its for-profit business, as the startup moves forward with plans to change its organizational structure.

The move comes after a coalition of California nonprofits, foundations and labor groups called on the state’s attorney general to investigate OpenAI’s decision to transition its nonprofit’s commercial subsidiary to a for-profit public benefit corporation. The coalition raised concerns about how OpenAI’s charitable assets would be protected.

“We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware,” Chief Executive Sam Altman wrote in a letter to OpenAI employees.

OpenAI started in 2015 as a nonprofit research lab but later found success developing products and services like ChatGPT and text-to-video tool Sora. As the competition among AI companies heated up, OpenAI said it needed to change its structure to raise more money. The startup recently raised $40 billion, bringing its valuation to $300 billion, but part of that funding could change if it does not shift its corporate structure by the end of the year.

OpenAI received pushback on its transition plans from Meta and some philanthropic leaders, including the San Francisco Foundation, who raised concerns with the state attorney general’s office. The company also was sued by its co-founder Elon Musk.

On Monday, San Francisco Foundation said it continues to hold concerns about OpenAI’s transition.

“While we are glad to see that OpenAI is responding to the questions that have been raised about their proposed restructuring, its announcement today doesn’t address the fundamental problem at issue: the independence from profit-seeking of the OpenAI nonprofit,” Fred Blackwell, CEO of the San Francisco Foundation, said in a statement.

Last month, OpenAI named nonprofit commissioners, including labor leader Dolores Huerta, to help its nonprofit amplify its philanthropic efforts.

OpenAI said it will advance its public benefit corporation plan in continued conversation with its investor Microsoft, civic leaders, offices of the attorneys general in California and Delaware and the nonprofit commissioners.

The announcement provides clarity to the company’s original plans that it outlined in December, in which it said the public benefit corporation would “run and control OpenAI’s operations and business.”

On Monday, Altman said that the nonprofit board will become a “big shareholder” in the public benefit corporation “in an amount supported by independent financial advisors, giving the nonprofit resources to support programs so AI can benefit many different communities, consistent with the mission.”

Altman expressed commitment to OpenAI’s nonprofit continuing to control the for-profit business as it does today. “That will not change,” he wrote.

Other AI startups that are structured as public benefit corporations include Anthropic and Musk’s xAI.