OpenAI has reversed its previous decision to convert entirely from a nonprofit organization into a fully for-profit entity, confirming instead that its nonprofit will continue to hold control over its corporate operations.
In a newly issued statement, OpenAI Board Chairman Bret Taylor explained that the company’s for-profit branch, established in 2019 under the nonprofit structure, will transition into a public benefit corporation (PBC). The nonprofit entity will retain significant control as well as major shareholding status in the newly created PBC structure.
Taylor emphasized that OpenAI, founded initially as a nonprofit, will indeed remain controlled by that nonprofit entity. He stated the decision followed extensive consultations with civic leaders and detailed discussions with Attorneys General offices in Delaware and California.
“We thank both offices and look forward to continuing these important conversations,” Taylor’s statement read, “as we ensure OpenAI can effectively pursue its mission of ensuring Artificial General Intelligence benefits all humankind.”
The company’s reversal arrives after significant controversy, which included a lawsuit initiated by Elon Musk. Musk had accused OpenAI of abandoning its original charitable mission of ensuring AI development benefited humanity. His legal action sought to block the planned transformation into a fully for-profit organization.
Although Musk’s request for an immediate injunction to halt the conversion was denied by a federal judge, the case remains scheduled for a jury trial in the spring of 2026. Musk’s efforts had also garnered support through amicus filings from former OpenAI employees and members of nonprofit advocacy groups. Additionally, a coalition comprising nonprofit and labor organizations—including the California Teamsters—had earlier petitioned California’s attorney general to intervene, asserting OpenAI had failed to safeguard its charitable assets. Prominent voices from academia and civil society also publicly opposed the company’s proposed restructuring.
OpenAI initially operated as a nonprofit starting in 2015, switching to a capped-profit model in 2019, with its nonprofit entity remaining dominant over the commercial arm. The recent plan to convert entirely to a for-profit structure was presented late in 2024 as an opportunity to infuse more resources into charitable activities related to healthcare, science, and education. At the time, these changes were said to potentially bring billions of dollars back into charitable initiatives. Nonetheless, these assurances did not ease all concerns, and the shift drew significant criticism and high-profile objections.
The implications of this recent reversal remain uncertain. Earlier reports suggested OpenAI needed to finalize its restructuring by year’s end to avoid risks associated with funding secured in the past months. With this sudden change in direction, the possible financial or organizational repercussions on OpenAI’s ongoing operations remain undisclosed.
