Summary: The reshaping of OpenAI from an unconventional nonprofit into a potentially profit-chasing public-benefit corporation is not just another corporate story. It’s a real struggle over who controls the wealth born from artificial intelligence and whether that wealth serves society or shareholders. This article dissects the legal, ethical, and financial tensions surrounding OpenAI’s restructuring and the grassroots effort determined to hold it accountable.
The Tension Between Purpose and Profit
OpenAI started with a bold promise: powerful AI should serve the public good, not just corporate interests. The structure they adopted in 2015—a nonprofit at the helm of a capped-profit company—was unconventional by Silicon Valley standards. But it set clear expectations: investors would get a return, but not unlimited profits; OpenAI would remain focused on humanity as a whole, not just commercial wins.
That promise now hangs in the balance. OpenAI’s leadership admits that in order to raise the $40 billion it needs to stay relevant in the AI arms race, it must change its structure. That change would let investors collect profits with fewer limits, though it would also supposedly supercharge the nonprofit’s funding. Critics, however, argue it’s a bait-and-switch. Is OpenAI simply cashing in on its purpose-built image while giving up on its founding values?
The Voice That Disrupted the Disruptors
Orson Aguilar isn’t a computer scientist or a VC investor, but when OpenAI hinted at its restructuring in October, he saw straight through the corporate language. As the head of LatinoProsperity, Aguilar has long fought for economic equity, particularly in communities that rarely benefit from technological revolutions. He saw AI tools like ChatGPT as potential leveling forces—tools that could drive upward mobility in historically underfunded neighborhoods.
Aguilar knew what was at risk: a nonprofit dismantled under the banner of “restructuring,” leaving behind a shell while funneling value into private hands. That same October, he made a call to longtime allies with deep roots in nonprofit accountability—Fred Blackwell and Judith Bell. This wasn’t just concern. It was the start of a movement.
History Repeats: The Hospital Playbook
Aguilar, Blackwell, and Bell weren’t guessing. They had seen this movie before. In the 1990s, corporations across the U.S. converted nonprofit hospitals and health insurers into for-profit companies. Some executives secured big paydays while charitable funds—once meant for public benefit—got stripped to the bone. But in California, activists pushed back and won multimillion-dollar settlements, birthing new health foundations that still serve vulnerable populations today.
California law says charitable assets belong to the public for life. And the attorney general has the final say on structural changes that touch these funds. That includes how value is calculated, what happens to nonprofit entities in transitions, and whether public promises are actually kept. It’s a powerful legal framework—if it’s enforced.
OpenAI’s $300 Billion Promises
OpenAI’s recent valuation hit $300 billion, based largely on a recent investment round. But three-quarters of that money is contingent—investors want the restructuring done before they hand over more cash. That puts enormous pressure on OpenAI to finalize its conversion in early 2025. While the company argues this will create one of the “best resourced nonprofits in history,” details remain vague. What kind of control will the nonprofit retain? How will the valuation be split? And who decides?
As of 2023, OpenAI’s nonprofit arm held just $21.1 million in net assets. That figure is dwarfed by the billions raised—and the risk is that the public gets pennies on the corporate dollar in this swap. Aguilar contends that anything short of fair market valuation—and true independence for the nonprofit—is an unlawful underpricing of charitable stewardship. His stance is clear: “Let’s fairly value this and get it independent.”
Will the Attorney General Hold the Line?
Aguilar’s coalition, now with over 50 advocacy groups, is applying public pressure on California Attorney General Rob Bonta. Their message: don’t rubber-stamp this process. Guard the public’s stake in OpenAI. If the AG’s office allows the nonprofit to be swallowed—or sidelined—without ensuring its assets are fully valued and protected, it could send a chilling signal across the nonprofit world: mission-driven orgs are just a holding bay for investor returns.
The AG has said he’s investigating, though no clear updates have emerged. Delaware officials—where OpenAI is incorporated—have also been nudged into action under similar pressure.
OpenAI’s Defensive Moves
Facing rising scrutiny, OpenAI reached out to Aguilar this March. They held a meeting with coalition leaders at the San Francisco Foundation’s building, fielding concerns and trying to correct what the company calls “misconceptions.” Critics say the meeting came up short—while OpenAI wanted input on its messaging, it dodged the main issues: What portion of the company’s value will go toward public benefit? How much control will the nonprofit have?
The meeting foreshadowed another move: OpenAI would form a new advisory commission to help shape its charitable obligations going forward.
A Commission Without Clout?
The newly minted advisory board includes some weighty names: labor legend Dolores Huerta, policy veteran Jack Oliver, executive Monica Lozano. But critics question whether any real power sits with them. Aguilar is blunt: he doesn’t trust the process yet. Neither do several AI researchers and former OpenAI insiders who fear the advisory effort is more appeasement than accountability.
Robert Ross, the former CEO of the California Endowment, is one commission member who brings experience with nonprofit conversions. He says the group will address spending priorities—but feels they also need to speak to governance and transparency. His quote lands flat with watchdogs, though: he admits his knowledge of AI “could fit into a thimble.” Can a panel unfamiliar with the tech realistically oversee how billions in AI-driven revenue are distributed back to the public?
More Than an AI Story
This fight isn’t really about AI or even OpenAI. It’s about public trust. It’s about whether companies born on nonprofit promises can chase massive private returns without betraying the people they claimed to serve. And it’s about ensuring that California’s history of demanding accountability doesn’t get quietly rewritten behind closed doors in Silicon Valley.
The stakes are obvious: If wealthy investors succeed in redefining public-purpose nonprofits as launch pads for profit, who will fund the next generation of institutions meant to serve the rest of us? If the AG concedes too much, it won’t just affect OpenAI. Every other social enterprise is watching.
So before this restructuring goes through, there’s one honest question every decision-maker ought to ask: If OpenAI started out as a nonprofit for all of us, should we let it end up as a profit machine for just a few of us?
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Featured Image courtesy of Unsplash and Ales Nesetril (Im7lZjxeLhg)
