The decision, revealed Monday, follows months of scrutiny, legal challenges, and internal debate—most notably, a lawsuit by OpenAI co-founder Elon Musk, who alleged the company had strayed from its original mission of developing AI to benefit humanity. The move also comes in response to conversations with civic leaders and regulatory authorities, including the Attorneys General of California and Delaware.
In a blog post, the company stated that while its nonprofit parent would retain control, the structure of the for-profit subsidiary would be revised to facilitate larger fundraising efforts. Notably, OpenAI's nonprofit entity will become a significant shareholder in the restructured public benefit corporation (PBC).
Originally proposed in December, the restructuring plan aimed to transition the for-profit subsidiary into a public benefit corporation—a hybrid model that allows companies to pursue social goals alongside profits. This model was intended to remove capital-raising constraints imposed by the existing nonprofit framework and appeal to investors amid intensifying global competition in AI.
However, the proposed changes sparked concerns about the distribution of assets and whether the company could continue balancing commercial incentives with its social mission. Monday’s clarification seeks to ease such worries by ensuring the nonprofit retains decision-making authority while still allowing greater investment inflows.
“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,” the company said. OpenAI added that it is working closely with major backer Microsoft, regulators, and newly appointed nonprofit commissioners to finalize the revised structure.
Bret Taylor, chairman of OpenAI’s board, noted the new arrangement keeps the organization “extremely close” to its existing structure. CEO Sam Altman called the decision a “compromise” that satisfies both investors and governance principles: “It works well enough for investors that they’re happy to continue to fund us to a degree we think we will need.”
The need for significant investment is growing, as OpenAI and its peers push toward artificial general intelligence (AGI)—a form of AI that can outperform humans across a wide range of tasks. In March, the company reportedly sought to raise up to $40 billion in a funding round led by SoftBank, pegging OpenAI’s valuation at $300 billion. However, that round was said to be contingent on the company completing its transition to a for-profit structure.
While the latest announcement retains OpenAI’s nonprofit core, some analysts warn it may limit investor appetite. “The nonprofit status significantly reduces OpenAI’s ability to raise capital,” said Gil Luria, analyst at D.A. Davidson. “Investors want to generate returns, and that’s harder if a nonprofit ultimately controls the commercial entity.”
OpenAI's unique governance model first came under intense scrutiny during a dramatic episode in November 2023, when the nonprofit board abruptly removed CEO Sam Altman. The board cited a breakdown in trust and communication, but following a swift backlash from staff and investors, Altman was reinstated within five days.
Now, with a clarified structure, OpenAI aims to strike a delicate balance: staying true to its mission while adapting to the financial realities of scaling breakthrough AI technology.