OpenAI’s nonprofit arm reported only $45,000 revenue in 2022, despite the company’s $86 billion valuation

OpenAI’s nonprofit arm revealed in its recent filing with the IRS that it generated $44,485 in revenue in 2022, mostly from investment income. However, the disclosure did not include the revenue from the for-profit division responsible for commercializing ChatGPT, a key contributor to OpenAI’s estimated $86 billion valuation from private investors.

OpenAI’s non-profit revenue details were disclosed through a 990 form submitted to the Internal Revenue Service (IRS). This form, mandatory for all non-profit organizations, unveiled that OpenAI’s non-profit sector earned $44,485 in revenue for the year 2022. The majority of this income stemmed from investments, while grants and donations contributed only a small portion.

However, critics have challenged OpenAI’s nonprofit status, questioning how an $86 billion company can operate under the umbrella of a charity. Some argue that this setup enables OpenAI to avoid taxes on profits and gain an advantage over non-tax-exempt AI companies.

In defense, OpenAI said the necessity of its nonprofit status for pursuing its mission independently of investor influence. The company stated that it’s committed to transparency, despite the limited disclosure of financial details.

OpenAI’s recent IRS filing adds to the confusion that emerged last month after the nonprofit’s board responsible for overseeing the organization as a whole, abruptly fired Sam Altman as the CEO. In a blog post, the board expressed a lack of confidence in Altman’s leadership, adding that Altman “was not consistently candid in his communications with the board.”

While OpenAI’s non-profit revenue for 2022 is modest at $44,485, the for-profit division’s financials remain undisclosed, contributing to the company’s reputation as a financial “black box.” OpenAI, initially established as a nonprofit in 2015, adopted a capped-profit entity in 2019, allowing it to secure substantial external funding and exhibit characteristics of a tech startup.

An August report from The Information suggested that OpenAI’s revenue surged to $28 million in the previous year, with expectations of approaching $1 billion in 2023. This growth is attributed to the widespread adoption of ChatGPT and advancements in OpenAI’s AI models.

Founded in 2015 by Elon Musk and Sam Altman, OpenAI began as a non-profit research institution with a mission to ensure the positive impact of AI on humanity. Over the years, it has developed influential AI systems, including the GPT-3 language model and the innovative DALL-E 2 image generation model. Microsoft has invested at least $13 billion in the company, contributing to its significant valuation of $86 billion.