fb tracking

California AG Must Investigate OpenAI’s Non-Profit Status

WASHINGTON, D.C. – Public Citizen today called on the State of California’s Attorney General Robert Bonta to investigate whether OpenAI should retain its non-profit status.

Recent news reports suggest that the non-profit OpenAI may be acting under the control of its for-profit subsidiary affiliate or prioritizing profit over its non-profit purpose. If that is the case, California law would require the attorney general to seek OpenAI’s dissolution, divestment of its assets, and reinvestment of those assets in charitable purposes.

In its letter to AG Bonta, Public Citizen reviewed recent events that suggest OpenAI is now acting with a for-profit purpose. The letter also addresses the potential value of the non-profit.

“Close observers of the recent tumult at OpenAI tell a consistent story about why its CEO Sam Altman was dismissed and then brought back: for-profit interests defeated  non-profit considerations,” said Robert Weissman, president of Public Citizen and author of the letter.

“The publicly available facts raise profound questions about whether OpenAI’s non-profit operates independently and controls the for-profit, or whether the for-profit entity now controls the non-profit. If the for-profit exerts effective control over the non-profit, or if profit-seeking is now the controlling motive at OpenAI, then it follows that the non-profit must be dissolved,” Weissman said.

In the event of a non-profit’s dissolution or conversion, California law requires distribution of its assets to another charity with the same or similar purposes. Payment equivalent to the value of OpenAI might, for instance, be used to endow one or more charitable foundations to advance artificial intelligence ethics and safety. At the time of the organizational tumult, the for-profit Open AI Global, LLC was valued at $86 billion, and recent reporting suggests that it may now have a valuation upwards of $100 billion. 

It is unclear exactly what portion of the for-profit entity is owned by the non-profit entity, although the two are structured so that the non-profit is supposed to have complete control over the for-profit. In its letter to AG Bonta, Public Citizen identifies factors that should factor into the valuation of the non-profit, which almost surely runs into the billions.

There is an established procedure and clear precedent for non-profit dissolution or conversion to for-profit status. Notably, when Blue Cross California converted to for-profit status in the early 1990s, it endowed two charitable foundations with more than $3 billion.