OpenAI to Retain Nonprofit Control Amid Restructuring, Altman Announces

In a significant reversal, OpenAI, the creator of ChatGPT, has decided to maintain its nonprofit roots, with CEO Sam Altman announcing that the organization’s nonprofit board will continue to oversee its operations.

This decision, detailed in a letter to employees on May 5, 2025, comes after months of speculation and legal scrutiny regarding a potential shift to a fully for-profit model.

The move addresses concerns from critics, including co-founder Elon Musk, while aligning OpenAI with its mission to develop artificial general intelligence (AGI) for the benefit of humanity.

Background and Initial Plans

Founded in 2015 as a nonprofit by Sam Altman, Elon Musk, and others, OpenAI aimed to advance AI research with a focus on safety and public good. In 2019, it introduced a capped-profit subsidiary to attract investment for resource-intensive AI development.

However, by September 2024, reports surfaced that OpenAI was planning to transition into a for-profit entity, potentially granting Altman a 7% equity stake and reducing nonprofit control. This sparked backlash from Musk, former employees, academics, and civic groups, who argued it betrayed OpenAI’s founding mission.

Musk filed lawsuits in 2024, alleging OpenAI’s shift to a for-profit model violated its nonprofit obligations and constituted a “stark betrayal” of its mission. The attorneys general of California and Delaware also raised concerns, prompting OpenAI to reconsider its restructuring plans.

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The Decision to Stay Nonprofit

In response to these pressures, Altman announced that OpenAI’s nonprofit parent, OpenAI Inc., will retain full voting control. The for-profit arm will transition into a Public Benefit Corporation (PBC), a structure adopted by peers like Anthropic and xAI.

This model balances shareholder interests with a public mission, allowing OpenAI to raise funds while preserving its commitment to ethical AI development.

“We decided to allow the nonprofit to stay in control 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,” said Bret Taylor, OpenAI’s board chair.

Altman stressed that independent financial advisors will determine the nonprofit's stake as a major shareholder in the PBC. This setup will provide resources to fund AI projects that benefit diverse communities.

The restructuring also involves removing profit caps for investors and adopting a traditional equity structure, addressing the need for significant funding, potentially up to $40 billion in a new round led by SoftBank.

Altman noted that this satisfies investment requirements, such as a $10 billion SoftBank deal contingent on restructuring by year-end.

Did You Know?
OpenAI’s ChatGPT reached 1 million users in just 5 days after its launch in November 2022, making it the fastest-growing digital platform to hit that milestone.

Implications and Criticisms

The decision has been hailed as a victory for OpenAI’s critics, including Musk, who argued that a for-profit shift prioritized commercial interests over safety. However, Musk’s legal team remains skeptical, with lawyer Marc Toberoff stating that the announcement “obscures critical details” about the nonprofit’s reduced ownership stake and does not resolve their lawsuit.

Some experts question whether the nonprofit’s control is merely “window dressing,” as new financial incentives could push OpenAI toward rapid AI deployment without adequate safety measures.

Page Hedley, OpenAI’s former policy and ethics adviser, noted that unresolved issues include ownership of the firm’s technology and prioritization of its goals.

Altman, however, insists the PBC structure aligns with OpenAI’s mission. “We want to build a brain for the world and make it super easy for people to use for whatever they want,” he wrote, emphasizing plans to make the nonprofit “the largest and most effective in history” by leveraging AI for societal benefits.

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Looking Ahead.

OpenAI’s decision reflects a delicate balance between mission-driven ideals and the financial realities of competing in the global AI race. The company faces escalating demand for its tools, with Altman admitting, “We currently cannot supply nearly as much AI as the world wants.” The PBC model aims to address this issue by enabling growth while maintaining nonprofit oversight.

The restructuring still requires regulatory approval from California and Delaware, with ongoing discussions to finalize details. OpenAI intends to establish a PBC board under the nonprofit's supervision and incorporate a nonprofit commission to guarantee the widespread distribution of AI benefits.

As OpenAI navigates these changes, its path will likely influence the broader AI industry, particularly how organizations balance profit motives with ethical responsibilities. For now, Altman’s commitment to nonprofit control signals a renewed focus on OpenAI’s founding vision, though questions about execution and transparency remain.