According to Fortune, Sam Altman told OpenAI employees during their weekly meeting that the company is changing its complex nonprofit corporate structure next year. The CEO said OpenAI will move away from being controlled by a nonprofit and transition to a more traditional for-profit organization.
He did not get into specifics on how the company will achieve that goal and what exactly OpenAI’s corporate structure will look like. A spokesperson told Fortune only that it is “focused on building AI that benefits everyone” and that nonprofit is “the core of [its] mission and will continue to exist.”
OpenAI started in 2015 as a nonprofit that relied on donor money. In a page explaining its structure, it said it had raised only $130.5 million in total donations over the years, making it clear that “donations alone will not keep up with the cost of the computational power and talent needed to pursue [its] core research.”
The then entirely nonprofit organization created a for-profit subsidiary to solve that problem. As Fortune points out, OpenAI’s nonprofit unit currently controls its for-profit arm, which in turn controls a holding company that takes investments from companies like Microsoft.
Under this structure, there is a limit to the profits that can be allocated to investors, including Microsoft. Anything that OpenAI earns beyond the limit will go to its nonprofit division. And according to a report from The Information published in June, the company’s revenue is growing rapidly. OpenAI reportedly doubled its annual revenue in the first half of the year, thanks to the subscription version of ChatGPT.
The company’s complex structure allowed OpenAI’s nonprofit board of directors to oust Altman in 2023, as they “no longer have confidence in his ability to continue leading OpenAI.” However, five days later, the board was dissolved and replaced, while Altman was reinstated as CEO.