'Need to raise more capital than we’d imagined': OpenAI announces plans to transition from non-profit structure

OpenAI has unveiled plans to restructure itself as a Public Benefit Corporation (PBC), signalling a major shift from its nonprofit origins. Announced in a blog post on Friday, the decision will see OpenAI’s for-profit arm take control of operations and business, while the nonprofit arm will pursue charitable initiatives in healthcare, education, and science.

By becoming a PBC, OpenAI aims to combine profit-driven goals with societal benefits. The restructured nonprofit will retain a stake in the business but relinquish its oversight role. OpenAI’s board described the change as essential for raising the capital required to advance toward artificial general intelligence (AGI).

“The hundreds⁠ of⁠ billions⁠ of⁠ dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission,” the board explained. “We once again need to raise more capital than we’d imagined.”

The move aligns OpenAI with competitors like Anthropic and Elon Musk’s xAI, which also operate as Public Benefit Corporations. The decision comes amid growing financial demands to support AI development and operational costs, with OpenAI’s data-intensive models requiring significant funding.

In September, reports emerged that OpenAI CEO Sam Altman would receive a 7% equity stake as part of the transition - a claim he denied. Meanwhile, the nonprofit board’s diminished role has sparked concerns about control, echoing last year’s turmoil when the board briefly ousted Altman before reinstating him.

The restructuring isn’t without opposition. Last month, Elon Musk filed a motion to block OpenAI’s shift to for-profit status, while Meta CEO Mark Zuckerberg urged California Attorney General Rob Bonta to intervene. Critics argue the change could compromise OpenAI’s original mission as a nonprofit research lab dedicated to AI for public good.

Despite the controversy, OpenAI’s leadership sees the transition as a step towards balancing innovation with societal impact. The nonprofit arm will operate independently, working to become “one of the best-resourced nonprofits in history,” according to the board.

Under the new structure, the nonprofit will receive shares in the PBC at valuations determined by independent advisors, ensuring its continued involvement in OpenAI’s financial success.