OpenAI reverses course, says its nonprofit will remain in control of its business operations

CodeCanyon · May 5

OpenAI has decided that its nonprofit division will retain control over its for-profit org, 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 transaction to a public benefit corporation (PBC). The nonprofit will control and also be a large shareholder of the PBC.

“OpenAI was founded as a non-profit, 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 of ensuring AGI benefits all of humanity,” 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 would preserve its nonprofit arm and infuse it with 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.

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The stakes were high for OpenAI, which needs to complete its for-profit conversion by the end of this year or next, or it will risk relinquishing some of the capital it has raised in recent months, according to reports. It’s unclear what consequences may befall OpenAI now that the company has changed course.

This story is developing. Check back for updates.