According to reports, OpenAI will abandon its convoluted non-profit organization in 2019.

Sam Altman informed OpenAI employees during their weekly meeting that the organization will be altering its intricate non-profit corporate framework in the upcoming year, as reported by Fortune. The CEO indicated that OpenAI intends to shift away from being governed by a non-profit entity and will evolve into a more conventional for-profit organization.

He did not provide detailed information regarding the methods by which the company plans to accomplish this transition or the precise nature of OpenAI’s future corporate structure. A spokesperson for the company said to Fortune that OpenAI remains “focused on building AI that benefits everyone” and stressed that the non-profit aspect is “core to [its] mission and will continue to exist.”

Established as a non-profit in 2015, OpenAI initially relied on donor funding. In a document outlining its organizational structure, it stated that it had raised a total of $130.5 million in donations over the years, which highlighted that “donations alone would not scale with the cost of computational power and talent needed to push [its] core research forward.” To address this challenge, the organization, which was originally entirely non-profit, established a for-profit subsidiary. As explained by Fortune, OpenAI’s non-profit entity now oversees its for-profit division, which in turn manages a holding company that attracts investments from firms such as Microsoft.

This arrangement imposes a limit on the profits that can be distributed to investors, including Microsoft. Any earnings that exceed this limit are allocated to the non-profit division. According to a report by The Information published in June, the company’s revenue has been experiencing significant growth, with OpenAI reportedly doubling its annualized revenue in the first half of the year, largely due to the subscription model of ChatGPT.

The intricate structure also enabled OpenAI’s non-profit board of directors to remove Altman from his position in 2023, citing a loss of trust in his administration capabilities. However, just five days later, the board was dissolved and replaced, resulting in Altman’s reinstatement as CEO.

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