OpenAI says it will remain under nonprofit control, rejects full for-profit shift amid Musk’s lawsuit
Nickie Louise
Posted On May 5, 2025
Just a week after a federal judge gave a green light to Elon Musk’s fraud lawsuit against OpenAI, the ChatGPT maker announced on Monday that it’s sticking with nonprofit control, while tweaking its structure to raise more money for the AI arms race.
In a blog post, Chair of the OpenAI Board of Directors Bret Taylor said:
“OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit.”
The decision comes as pressure mounts from critics, regulators, and rivals like Musk, who sued the company earlier this year for allegedly drifting away from its original mission to build AI for the public good. OpenAI now says it will keep its nonprofit parent at the helm, but will move forward with converting its for-profit subsidiary into a public benefit corporation—a legal framework that allows it to pursue profits while still committing to broader social goals.
“We made the decision for the nonprofit to retain control of OpenAI 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. We thank both offices and we look forward to continuing these important conversations to make sure OpenAI can continue to effectively pursue its mission of ensuring AGI benefits all of humanity. Sam wrote the letter below to our employees and stakeholders about why we are so excited for this new direction,” Taylor said in a blog post.
The company added that it’s working with Microsoft, regulators, and new nonprofit board members to finalize the update.
Back in December, OpenAI floated the idea of shifting its for-profit arm into a public benefit corporation. The move was meant to clear the path for bigger fundraising rounds by loosening the restrictions tied to its nonprofit charter. But the proposal sparked pushback over whether the nonprofit would still have real authority and how the company would balance profit motives with its original public mission.
On Monday, OpenAI clarified that its nonprofit parent will not only retain control but also become a major shareholder in the benefit corporation.
Bret Taylor, chair of OpenAI’s board, said the new plan leaves the structure “extremely close” to what’s already in place. CEO Sam Altman called it a compromise that still works for investors.
“We believe this is well over the bar of what we need to be able to fund-raise,” Altman said during a call with reporters. “There are no changes to any existing investor relationships.”
That’s a key detail, since OpenAI is chasing big checks. The company is reportedly looking to raise up to $40 billion in a new funding round led by SoftBank, valuing the company at $300 billion. The fundraising push had been contingent on OpenAI completing its shift to for-profit status by the end of the year. Monday’s move puts that plan in a new light, but Altman suggested it won’t stop SoftBank’s interest.
Microsoft, OpenAI’s biggest backer, declined to comment. SoftBank hasn’t weighed in either.
Still, some analysts say sticking with the nonprofit model could put limits on how aggressively OpenAI can raise capital, compared to a traditional corporate structure.
“While it seems to address the issues the company was facing in trying to become a for-profit entity, it still leaves the nonprofit as the primary owner of the public benefit corporation, so it’s not really clear what changes,” said Bob O’Donnell, chief analyst at TECHnalysis Research.
The announcement also throws a wrench into Musk’s lawsuit, which argued that OpenAI was abandoning its original mission. That case is still moving forward, with a jury trial set for March 2026.
Earlier this year, a Musk-led group made an unsolicited $97.4 billion bid to acquire OpenAI, which was quickly brushed off by Altman with a “no thank you.” Musk, who co-founded OpenAI, has since launched a competing AI company called xAI.
OpenAI’s tangled corporate structure came under heavy scrutiny last November, when its nonprofit board abruptly ousted Altman. He returned just five days later, backed by employee pressure and Microsoft’s support, but the internal drama raised serious questions about who really controls the company—and what kind of AI future it’s steering toward.
Meanwhile, below is a copy of the letter OpenAI CEO Sam Altman sent to the company’s employees.
“Sam’s Letter to Employees.
OpenAI is not a normal company and never will be.
Our mission is to ensure that artificial general intelligence (AGI) benefits all of humanity.
When we started OpenAI, we did not have a detailed sense for how we were going to accomplish our mission. We started out staring at each other around a kitchen table, wondering what research we should do. Back then, we did not contemplate products, a business model. We could not contemplate the direct benefits of AI being used for medical advice, learning, productivity, and much more, or the needs for hundreds of billions of dollars of compute to train models and serve users.
We did not really know how AGI was going to get built, or used. A lot of people could imagine an oracle that could tell scientists and presidents what to do, and although it could be incredibly dangerous, maybe those few people could be trusted with it.
A lot of people around OpenAI in the early days thought AI should only be in the hands of a few trusted people who could “handle it”.
We now see a way for AGI to directly empower everyone as the most capable tool in human history. If we can do this, we believe people will build incredible things for each other and continue to drive society and quality of life forward. It will of course not be all used for good, but we trust humanity and think the good will outweigh the bad by orders of magnitude.
We are committed to this path of democratic AI. We want to put incredible tools in the hands of everyone. We are amazed and delighted by what they are creating with our tools, and how much they want to use them. We want to open-source very capable models. We want to give our users a great deal of freedom in how we let them use our tools within broad boundaries, even if we don’t always share the same moral framework, and to let our users make decisions about the behavior of ChatGPT.
We believe this is the best path forward—AGI should enable all of humanity to benefit each other. We realize some people have very different opinions.
We want to build a brain for the world and make it super easy for people to use for whatever they want (subject to few restrictions; freedom shouldn’t impinge on other people’s freedom, for example).
People are using ChatGPT to increase their productivity as scientists, coders, and much more(opens in a new window). People are using ChatGPT to solve serious healthcare challenges they are facing and learn more than ever before. People are using ChatGPT to get advice about how to handle difficult situations. We are very proud to offer a service that is doing so much for so many people; it is the one of most direct fulfillments of our mission we can imagine.
But they want to use it much more; we currently cannot supply nearly as much AI as the world wants and we have to put usage limits on our systems and run them slowly. As the systems become more capable, they will want to use it even more, for even more wonderful things.
We had no idea this was going to be the state of the world when we launched our research lab almost a decade ago. But now that we see this picture, we are thrilled.
It is time for us to evolve our structure. There are three things we want to accomplish:
- We want to be able to operate and get resources in such a way that we can make our services broadly available to all of humanity, which currently requires hundreds of billions of dollars and may eventually require trillions of dollars. We believe this is the best way for us to fulfill our mission and to get people to create massive benefits for each other with these new tools.
- We want our nonprofit to be the largest and most effective nonprofit in history that will be focused on using AI to enable the highest-leverage outcomes for people.
- We want to deliver beneficial AGI. This includes contributing to the shape of safety and alignment; we are proud of our track record with the systems we have launched, the alignment research we have done, processes like red teaming, and transparency into model behavior with innovations like the model spec(opens in a new window). As AI accelerates, our commitment to safety grows stronger. We want to make sure democratic AI wins over authoritarian AI.
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. We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners.
OpenAI was founded as a nonprofit, is today a nonprofit that oversees and controls the for-profit, and going forward will remain a nonprofit that oversees and controls the for-profit. That will not change.
The for-profit LLC under the nonprofit will transition to a Public Benefit Corporation (PBC) with the same mission. PBCs have become the standard for-profit structure for other AGI labs like Anthropic and X.ai, as well as many purpose driven companies like Patagonia. We think it makes sense for us, too.
Instead of our current complex capped-profit structure—which made sense when it looked like there might be one dominant AGI effort but doesn’t in a world of many great AGI companies—we are moving to a normal capital structure where everyone has stock. This is not a sale, but a change of structure to something simpler.
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, giving the nonprofit resources to support programs so AI can benefit many different communities, consistent with the mission. And as the PBC grows, the nonprofit’s resources will grow, so it can do even more. We’re excited to soon get recommendations from our nonprofit commission on how we can help make sure AI benefits everyone—not just a few. Their ideas will focus on how our nonprofit work can support a more democratic AI future, and have real impact in areas like health, education, public services, and scientific discovery.
We believe this sets us up to continue to make rapid, safe progress and to put great AI in the hands of everyone. Creating AGI is our brick in the path of human progress; we can’t wait to see what bricks you will add next.
Sam Altman
May 2025″
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