A Philanthropic Mission at Risk as OpenAI Shifts to For-Profit Model

OpenAI’s proposed restructuring from a nonprofit to a for-profit entity has drawn intense scrutiny from legal and advocacy groups, prompting calls for regulatory intervention. More than 30 former employees—including prominent figures like Geoffrey Hinton, Stuart Russell, and Margaret Mitchell—have joined a coalition urging California Attorney General Rob Bonta and his Delaware counterpart to block the transition. The group argues that the restructuring would strip the nonprofit of its governance role over the development of artificial general intelligence (AGI), undermining its founding mission to ensure AGI benefits all of humanity. The letter emphasizes that the nonprofit structure provides crucial safeguards that prevent the company from diverging from its public interest objectives.

The restructuring plan, which must be finalized by year-end, is part of OpenAI’s strategy to secure a $40 billion investment led by SoftBank. However, it requires formal approval from both California and Delaware attorneys general, as the nonprofit is incorporated in Delaware and operates in California. California’s attorney general’s office has already initiated an investigation, seeking detailed information from OpenAI on how it plans to transfer assets from the nonprofit to the for-profit entity. Deputy Attorney General Christopher Lamerdin emphasized that the nonprofit’s assets are “irrevocably dedicated to its charitable purpose” and that the state has a responsibility to protect those resources. The office has requested a response from OpenAI by January 8.

Public advocacy groups have also raised concerns about the nonprofit’s ability to maintain its mission under the new structure. Public Citizen’s Co-President Robert Weissman has argued that the nonprofit has already failed to uphold its original purpose and should be dissolved. He warned that the proposed restructuring would transform the nonprofit into a corporate foundation serving the interests of the for-profit arm, rather than an independent body overseeing AGI development. This has led to calls for the California attorney general to investigate the valuation of OpenAI’s assets and ensure the nonprofit receives fair market compensation for any transferred property.

OpenAI has defended the restructuring, stating that the new governance model will strengthen the nonprofit and ensure that it remains aligned with its long-term mission. The company plans to convert its for-profit subsidiary into a public benefit corporation (PBC), a structure that legally requires the company to consider both shareholder and public interests. CEO Sam Altman emphasized that the nonprofit will retain control of the PBC and that the board’s decision was driven by the need to secure future resources for AGI development. The nonprofit will also receive a significant equity stake in the PBC, potentially making it one of the most well-funded philanthropic organizations in the world.

The controversy has drawn broader industry attention, with critics warning that the restructuring could set a dangerous precedent for other nonprofits seeking to transition to for-profit models. The nonprofit advocacy group Public Citizen has cited the 1990s case of Blue Cross of California, where the nonprofit transferred assets to a for-profit subsidiary and subsequently provided billions in stock to affiliated foundations as a precedent for OpenAI. Investors have also expressed concerns, noting that the shift could affect the company’s transparency and accountability while influencing broader AI sector governance. As the debate continues, the outcome of the California and Delaware attorneys general’ investigations will be critical in determining whether OpenAI can proceed with its restructuring and what implications it will have for the future of nonprofit-driven AI governance.