OpenAI Reverses Course, Keeps Nonprofit in Control of Its Business Operations

In a dramatic policy reversal, OpenAI announced that its nonprofit parent will remain in control of its for-profit operations, abandoning earlier plans to convert the company into a traditional for-profit entity.

The decision comes amid mounting scrutiny from legal authorities and the public. OpenAI stated that its for-profit arm will now transition into a public benefit corporation (PBC) — a hybrid legal structure that allows companies to pursue both profit and public mission. The PBC will be controlled and significantly owned by the original nonprofit organization.

“OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit,” wrote OpenAI Board Chairman Bret Taylor in a blog post. “Going forward, it will continue to be overseen and controlled by that nonprofit.”

Why It Matters

This move comes at a critical time for OpenAI, which has become a central player in the global race to develop artificial general intelligence (AGI). Keeping the nonprofit in control signals a recommitment to OpenAI’s original mission: ensuring AGI benefits all of humanity, not just shareholders.

Had OpenAI transitioned fully to a for-profit model, critics argued it could risk undermining that mission by prioritizing investor returns over public interest. Maintaining nonprofit oversight may help alleviate those concerns — especially in light of last year’s internal tensions and board shakeups over the company's direction and governance.

The shift to a PBC structure also allows OpenAI to continue raising significant capital — a key reason it had considered a for-profit conversion in the first place — while legally obligating it to consider societal impact in its decisions.

Legal & Public Pressure Played a Role

According to the company, the reversal followed discussions with the Attorney General offices of California and Delaware, where OpenAI is incorporated. The dialogue, described as “constructive,” appears to have influenced the organization’s decision to reaffirm its nonprofit’s leadership role.

“We thank both offices and we look forward to continuing these important conversations,” Taylor added.

Community Reactions: Relief, Skepticism, and Watchfulness

The AI and tech community has reacted with cautious optimism. Many saw the decision as a necessary correction — and a reminder of the intense ethical stakes surrounding AGI development.

“This is the right call. AGI development cannot be led by unchecked profit motives,” wrote Mozilla Fellow and AI policy analyst Abeba Birhane on X (formerly Twitter).

Others remain skeptical about how much true control the nonprofit will retain, especially given OpenAI’s close partnerships with major investors like Microsoft.

“Let’s see if this is structural or symbolic,” said one prominent AI researcher. “Governance clarity is critical now more than ever.”

Transparency advocates are urging OpenAI to publish more detailed governance structures and clarify the nonprofit’s authority over strategic decisions.

Background

Founded as a nonprofit in 2015 by Sam Altman, Elon Musk, and others, OpenAI shifted to a “capped-profit” structure in 2019 to attract funding while capping investor returns. Under that model, the nonprofit retained control over the business entity — a structure that is now being reasserted, but within the framework of a public benefit corporation.

The organization says it will still pursue “charitable initiatives” in areas like healthcare, science, and education, funded in part by profits from its enterprise efforts.

OpenAI’s next steps — particularly how it balances public good with business growth — will be closely watched, as the company continues to lead the charge in AI research and commercialization.