OpenAI Restructures For-Profit Arm into Public Benefit Corporation, Maintains Nonprofit Control
OpenAI has announced a major structural shift by converting its for-profit arm into a public benefit corporation (PBC) while reaffirming that its nonprofit entity will continue to oversee and control the organisation. Founded as a nonprofit, OpenAI has operated with a unique governance model since its inception. In 2019, it introduced a for-profit limited liability company (LLC) under nonprofit control to attract investment while capping profits. The LLC will now become a PBC, a move the company says aligns better with its mission and the evolving AI landscape. In December, OpenAI announced plans to convert its for-profit arm into a PBC—a structure that allows companies to pursue both shareholder returns and social objectives, in contrast to nonprofits, which focus exclusively on the public good. At that time, the company stated that the PBC would run and control OpenAI’s operations and business, while the nonprofit would hire a leadership team and staff to pursue charitable initiatives in sectors such as healthcare, education, and science. However, this plan has now been reversed, and the nonprofit will now maintain control over the organisation. “The for-profit LLC under the nonprofit will transition to a public benefit corporation with the same mission,” said CEO Sam Altman in a letter to employees and stakeholders. “The nonprofit will continue to control the PBC, and will become a big shareholder in the PBC, in an amount supported by independent financial advisors.” According to OpenAI, this change will help secure the large-scale funding needed to build and operate increasingly powerful AI systems. The company noted that it currently cannot meet demand for its services due to resource constraints, stating that delivering AI broadly “requires hundreds of billions of dollars and may eventually require trillions”. OpenAI’s nonprofit will use the financial benefits from its PBC ownership to expand programmes aimed at democratising AI and supporting its use in areas such as health, education, and public services. The restructuring follows discussions with civic leaders and the attorneys general of California and Delaware. “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,” Altman wrote. Altman emphasised that OpenAI’s core mission remains unchanged. “Our mission is to ensure that artificial general intelligence (AGI) benefits all of humanity.” The organisation also indicated that it intends to support open-source efforts and give users broad freedom in how they use its tools. “We want to open source very capable models,” Altman wrote, noting a focus on user autonomy within boundaries that preserve safety and respect for others’ freedom. This shift also simplifies OpenAI’s capital structure, ending its complex capped-profit model. “This is not a sale, but a change of structure to something simpler,” Altman stated. As the AI industry continues to expand with multiple players pursuing AGI, OpenAI’s move aligns it with peers like Anthropic and xAI , which already operate as PBCs. The company has formed a nonprofit commission to advise on how best to use its new resources to serve the public good. Recommendations are expected to focus on enabling equitable AI outcomes. “We believe this sets us up to continue to make rapid, safe progress and to put great AI in the hands of everyone,” Altman concluded.
“We want to open source very capable models.”
OpenAI has announced a major structural shift by converting its for-profit arm into a public benefit corporation (PBC) while reaffirming that its nonprofit entity will continue to oversee and control the organisation.
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Siddharth is a media graduate who loves to explore tech through journalism and putting forward ideas worth pondering about in the era of artificial intelligence.