OpenAI has announced plans to reorganize as a public benefit corporation (PBC), signaling a major shift away from its nonprofit origins. The decision, announced in a blog post on Friday, will see OpenAI’s for-profit arm manage its operations and operations, while its nonprofit arm will drive its philanthropic efforts in health care, education, and science.
By becoming a PBC, OpenAI aims to combine profit-driven goals with social good. The reorganized nonprofit will retain an equity stake in the business but relinquish its oversight role. OpenAI’s board of directors explained that this change is essential to raising the funding needed to move towards artificial general intelligence (AGI).
“The hundreds of billions of dollars that leading companies are currently investing in AI development shows what it really takes for OpenAI to continue pursuing its mission,” the board explained. “We once again need to raise more money than we ever imagined.”
The move brings OpenAI into alignment with competitors such as Anthropic and Elon Musk’s xAI, which also operate as public benefit corporations. This decision comes as OpenAI’s data-intensive models require significant funding and increasing financial demands to support AI development and operating costs.
In September, reports surfaced that OpenAI CEO Sam Altman would receive a 7% stake as part of the transition, a claim he denied. Meanwhile, the decline in the nonprofit board’s role has raised concerns about its management, reflecting the turmoil of last year when the board briefly fired and then reinstated Altman.
This reorganization is not without opposition. Last month, Elon Musk filed a motion to block OpenAI from becoming a commercial company, while Meta CEO Mark Zuckerberg intervened with California Attorney General Rob Bonta. I urged him to do so. Critics say the changes could undermine OpenAI’s original mission as a nonprofit research institute dedicated to AI in the public interest.
Despite the controversy, OpenAI’s leadership sees this transition as a step toward balancing innovation and social impact. The nonprofit division will operate independently and strive to be “one of the most well-resourced nonprofit organizations in history,” the board said.
Under the new structure, the nonprofit will receive equity in PBC at a valuation determined by independent advisors, ensuring continued involvement in OpenAI’s financial success.
