OpenAI has announced it will maintain its nonprofit status following pushback against plans to convert to a for-profit structure. The decision came after discussions with civic leaders and attorneys general from California and Delaware, according to a board statement released overnight.
The artificial intelligence company will implement a revised organizational structure, with its for-profit LLC transitioning to a Public Benefit Corporation (PBC) while remaining under nonprofit control. This new arrangement ensures the nonprofit entity will serve as both controller and major shareholder of the PBC, providing additional resources to support its mission-driven objectives.
Sam Altman, OpenAI’s leader, explained to employees that the organization aims to become “the largest and most effective nonprofit in history” focused on leveraging AI for maximum societal impact. The restructuring maintains OpenAI’s original mission while replacing its previous capped-profit model with an equity-based system. A newly established nonprofit commission will guide initiatives ensuring AI benefits public interests across sectors including healthcare, education, scientific research, and public services.
However, the structural modifications have not resolved ongoing legal disputes with co-founder Elon Musk. Marc Toberoff, Musk’s lead attorney, dismissed the announcement as a “transparent dodge” that fails to address fundamental concerns about charitable assets being transferred to benefit private individuals, including Altman, investors, and Microsoft.
The legal battle intensified in March when U.S. District Judge Yvonne Gonzalez Rogers denied Musk’s request for an injunction to block the restructuring. Citing “public interest at stake and potential for harm,” the judge scheduled an expedited trial for fall 2025 to address claims about the legality of OpenAI’s structural conversion and related contractual issues.
The announcement follows earlier developments this year when a consortium led by Musk attempted to acquire OpenAI with a reported $100 billion offer, which the company promptly rejected.
The revised structure represents a significant pivot from Altman’s previous plans last fall to transform OpenAI into a fully for-profit enterprise – efforts that triggered Musk’s legal challenge aimed at preserving the organization’s open nature. Under the new framework, the nonprofit will maintain oversight while the PBC model, similar to that employed by other AI laboratories like Anthropic and X.ai, allows for mission-aligned commercial activities.
In its blog post, the board emphasized that OpenAI’s founding nonprofit will continue its oversight role while gaining enhanced capabilities through its substantial ownership stake in the PBC. This arrangement is designed to provide the nonprofit with greater resources to pursue high-impact outcomes benefiting humanity.
The restructuring aims to balance OpenAI’s original mission of democratizing artificial general intelligence (AGI) with the practical requirements of operating in the competitive AI sector. By retaining nonprofit control while establishing a more conventional corporate structure through the PBC, OpenAI seeks to accelerate development while maintaining its commitment to responsible AI advancement.
This organizational evolution reflects broader tensions in the AI industry between commercial interests and public benefit missions. OpenAI’s decision to preserve nonprofit control while adopting a hybrid structure suggests an attempt to navigate these competing demands while addressing concerns from various stakeholders about the company’s future direction and governance.