OpenAI has officially decided to maintain its nonprofit governance structure, shelving earlier plans to transition into a fully for-profit company. The reversal follows rising criticism and discussions with civic leaders and legal authorities in California and Delaware, CEO Sam Altman announced in a blog post.
Originally founded as a nonprofit, OpenAI had been considering a structural overhaul since Altman’s brief but dramatic ousting in November 2023—a move that rattled the tech community. In December, he revealed plans to convert OpenAI into a public benefit corporation (PBC), a hybrid model aimed at balancing commercial goals with social good. However, the proposal faced scrutiny over fears it might divert focus from the organization’s mission of advancing AI for public benefit.
Notably, Tesla CEO and OpenAI co-founder Elon Musk, a vocal critic of the organization’s direction, had filed a lawsuit to halt the for-profit transition. Musk accused Altman of prioritizing rapid expansion over OpenAI’s foundational values. Musk now runs his own AI company, xAI.
In the newly unveiled governance structure, OpenAI’s nonprofit entity will retain oversight and gain significant shareholding in the PBC. “The nonprofit will maintain control while also becoming a major shareholder in the public benefit corporation, ensuring it has the necessary resources to deliver on its mission,” the blog post noted.
The original restructuring, proposed last September, aimed to draw more investors and realign OpenAI with a conventional corporate framework. Had it gone forward, Altman was set to receive equity—reportedly about 7%—marking a departure from his earlier stance of declining financial ownership in the company.
In March, OpenAI raised $40 billion in funding led by Japanese tech giant SoftBank, including a $30 billion direct investment. However, the agreement came with conditions—SoftBank would reduce its commitment by $20 billion if OpenAI failed to transition into a full for-profit model by the end of 2025.
While the new structure may preserve OpenAI’s original mission, it remains to be seen how investors will respond—especially those banking on a more traditional corporate model.
