From AI to ROI? Not Yet — OpenAI’s Nonprofit Roots Just Blocked Altman’s Profit Dreams

OpenAI has scrapped its plan to become a fully for-profit company, reaffirming its commitment to nonprofit governance after intense public scrutiny, legal challenges, and a headline-making lawsuit from co-founder Elon Musk.

Instead, the company will restructure its for-profit subsidiary into a Public Benefit Corporation (PBC), a model that allows investors to earn uncapped returns while legally requiring the company to balance profit with public interest.

Crucially, control will remain with OpenAI’s nonprofit board.

In a blog post on 5 May, OpenAI emphasized that the move will enable it to attract more capital—essential to funding the compute-heavy future of artificial intelligence (AI)—without ceding decision-making power.

The ChatGPT-maker noted:

“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.”

CEO Sam Altman reiterated this in a letter to employees, noting that building frontier AI could eventually cost “trillions of dollars.”

The company’s most recent funding round valued it at $260 billion, underscoring its appetite for growth.

The shift marks a notable reversal from earlier ambitions to spin out the nonprofit entirely.

Now, OpenAI aims to balance mission-driven oversight with aggressive fundraising, asserting that this hybrid model is both financially viable and ethically grounded.

OpenAI Reverses Course Amidst Legal Pressure and Public Scrutiny

OpenAI’s decision to remain under nonprofit control comes after mounting internal and external pressure, including legal action, public criticism, and quiet negotiations with regulators.

While Musk’s high-profile lawsuit grabbed headlines, he was not the only critic.

Former employees and AI researchers warned that abandoning the nonprofit structure in favour of pure profit would betray OpenAI’s founding mission: to ensure artificial intelligence benefits humanity.

They argued that without nonprofit oversight, commercial interests would inevitably take precedence.

Founded in 2015 as a nonprofit, OpenAI created a for-profit arm in 2019 to attract the vast capital needed for AI development, but that entity has remained under the nonprofit’s authority.

Musk’s 2024 lawsuit accused Altman of steering the company toward profit-driven goals under false pretenses, citing violations of their original agreement.

Musk, now leading rival AI firm xAI, claims OpenAI has engaged in anti-competitive practices that harmed his venture.

Despite Altman’s public insistence that the company is focused solely on its mission—remarking pointedly, “We’re all obsessed with our mission. You’re all obsessed with Elon”—OpenAI has been working behind the scenes to satisfy concerns from regulators and investors.

Attorneys general in California and Delaware, where OpenAI is based and incorporated, sought assurances that the nonprofit would retain control and that no future restructuring could siphon assets into the for-profit side.

The company also had to reassure Microsoft, its largest investor, that the new arrangement would not undermine its rights.

The result is a hybrid structure: OpenAI will convert its for-profit unit into a Public Benefit Corporation, removing caps on investor returns while keeping the nonprofit board firmly in charge.

Board chair Bret Taylor confirmed the move was shaped through discussions with public officials and legal experts—underscoring how public accountability and private capital are now being carefully balanced.

He said:

“We made the decision for the non-profit 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.”