OpenAI Reaffirms Nonprofit Control Over Business Operations

OpenAI has reversed its initial plan to convert to a fully for-profit model, deciding instead to keep its non-profit division in control of the organization.

The company announced that its business arm, which has operated under the non-profit since 2019, will transition into a Public Benefit Corporation (PBC). The original non-profit will retain control and hold a significant ownership stake in the new PBC.

"OpenAI was founded as a non-profit and remains under its oversight and control today," wrote OpenAI Board Chairman Bret Taylor in a company blog statement. "This structure will continue moving forward."

OpenAI stated the decision followed consultations with civic leaders and constructive discussions with the Attorney General offices in Delaware and California.

"We appreciate both offices and look forward to continuing these important conversations to ensure OpenAI can effectively pursue its mission," Taylor added.

Founded as a non-profit in 2015, OpenAI shifted to a "capped-profit" model in 2019 and was recently attempting another restructuring into a for-profit entity. The 2019 change kept the non-profit wing, which maintains a controlling stake in the corporate arm.

The company argued the conversion was necessary to raise capital for growth, claiming it would preserve non-profit status and direct extra resources toward charitable initiatives in healthcare, education, and science. In return for its controlling stake, the non-profit was positioned to gain billions of dollars.

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The proposed shift faced significant opposition, notably from early investor Elon Musk, who sued OpenAI, accusing the startup of abandoning its non-profit mission to benefit humanity with AI.

Musk sought a preliminary injunction to block the conversion. A federal judge denied the injunction but allowed the case to proceed to a jury trial scheduled for spring 2026.

Several weeks ago, a group of former OpenAI employees and Encode, a non-profit that co-sponsored California's SB 1047 AI safety bill, filed amicus briefs supporting Musk's lawsuit. Separately, a coalition including non-profits and labor groups like the California Teamsters petitioned California Attorney General Rob Bonta to stop the conversion, alleging OpenAI failed to protect its charitable assets.

Several Nobel laureates, law professors, and civil society organizations had also written to Bonta and Delaware Attorney General Kathy Jennings, urging them to halt the restructuring.

Reports indicated high stakes for OpenAI, which faced a deadline to complete the for-profit conversion by the end of this year or next to avoid risking some recently raised capital. The consequences of reversing course are now unclear.

In a Monday letter to staff published on the OpenAI blog, CEO Sam Altman suggested the company might eventually need "trillions of dollars" to achieve its goal of making its services "broadly available to all of humanity."

"[The non-profit] will become a major shareholder in the PBC, with an ownership level validated by independent financial advisors," Altman wrote. "We are moving to a standard capital structure where everyone holds stock. ... We look forward to finalizing the plan details through continued dialogue with them, our partner Microsoft, and our newly appointed non-profit commissioners."