OpenAI Maintains Nonprofit Control Amid Shift to Public Benefit Corporation

OpenAI has decided not to transition into a fully commercial entity, maintaining that its nonprofit arm will retain control of the organization.

Since 2019, the business segment operating under the nonprofit umbrella will be restructured into a public benefit corporation (PBC). This nonprofit structure will remain the main shareholder, ensuring oversight of the corporation’s activities.

A PBC is a type of for-profit company that is legally required to prioritize social missions alongside shareholder interests.

«OpenAI was established as a nonprofit organization and continues to operate under that oversight and control. That will remain unchanged,» stated Board Chair Bret Taylor.

According to OpenAI, this decision came after consulting with civic leaders and engaging in constructive dialogues with the offices of the Attorney General of Delaware and California.

«We appreciate both offices and look forward to continuing these important conversations to ensure that OpenAI can fulfill its mission effectively,» Taylor remarked.

Founded in 2015 as a nonprofit, OpenAI transitioned in 2019 to a «limited profit» model to attract funding while preserving its nonprofit arm, which currently holds a majority stake in the corporate entity.

Co-founder Elon Musk disagreed with this approach and has filed a lawsuit against the company. The lawsuit claims that the AI startup and its founders, Sam Altman and Greg Brockman, have violated their founding agreement by prioritizing commercial profits over the public good.

Musk sought a preliminary injunction to halt the restructuring. A federal judge dismissed his request but allowed the case to be taken to a jury trial in the spring of 2026.

Musk’s attorney commented that OpenAI’s recent decision to partially retract its restructuring plan «changes nothing» and that the billionaire can continue his legal battle against the startup.

«The statement from OpenAI is a deceptive tactic that fails to address the core issues: charitable assets have been and will be transferred for the benefit of private individuals, including Altman, his investors, and Microsoft,» Mark Toberoff said on Monday.

He added that the revised restructuring plan for the AI startup appears to be designed to evade legal scrutiny while still contradicting the company’s foundational mission of developing AI for the benefit of all humanity.

«The founders’ mission remains steadfast,» he noted.

The transformation is critically important for OpenAI, as it has attracted capital under the condition that it becomes a commercial entity by December 31, 2025.

With the proposed structure, SoftBank is prepared to invest $30 billion in a recently announced funding round, Altman reported.

In a message to employees, he stated that OpenAI might require «trillions of dollars» to achieve its goal of making its products widely accessible to all of humanity.

«[The nonprofit OpenAI] will become a significant shareholder in the PBC at a level confirmed by independent financial advisors. We are moving to a conventional capital structure where everyone holds shares. […] We look forward to developing the details of our plan in further negotiations with Microsoft and the newly appointed nonprofit members of the board,» Altman wrote.

Microsoft, OpenAI’s largest investor, has yet to approve the transition. According to sources cited by Bloomberg, the corporation wants to ensure that any changes safeguard its investments. Both companies are continuing discussions regarding the transaction’s specifics.

Microsoft’s approval is essential. Currently, only OpenAI insiders, Bill Gates’ firm, and other early investors have voting rights regarding the restructuring, the agency highlights.

It should be noted that in June 2024, it was reported that OpenAI was considering a shift to a commercial business structure.