Let’s Talk About OpenAI, Nonprofits, and Reality

There’s a lot of noise right now around OpenAI’s proposed shift in governance—removing nonprofit control to give Sam Altman equity and formalizing more traditional for-profit structures within a public benefit corporation model. Critics are calling it a betrayal of mission. A Pandora’s box. Even a threat to the very idea of charitable giving.

Let’s get real.

Here’s what I can tell you from the inside: trying to scale a nonprofit at the speed required by modern innovation—especially in a space like artificial intelligence—is nearly impossible.

Nonprofits Aren’t Built for This Speed

In general, nonprofits must stay in the black. There’s no five-year runway of red ink that is typical of most tech startups. No moonshot funding from venture capital willing to burn millions before revenue shows up.

That’s not a flaw. It’s a feature of the nonprofit structure.

But when you’re competing in a high-stakes tech race—where China has its own AI push, Elon Musk has xAI (and has also been leading the charge against Open AI’s conversion while also trying to buy it), and every major tech company is sprinting—you cannot scale at nonprofit speed.

I’ve been there—starting a nonprofit from a kitchen table and growing it into a multi-million-dollar, multi-country operation. And I can tell you: even with momentum, reach, and outcomes, access to capital was always the ceiling.

OpenAI knows this. And if you’ve ever tried to scale something mission-driven with any real urgency, you know this too.

What’s more—this kind of structural evolution isn’t illegal, and it isn’t new.

There are mechanisms in place for nonprofits to create or transition into for-profit entities under specific conditions, especially when it serves a broader mission.

National Geographic spun off its media arm into a for-profit with Fox. Mozilla did the same with Firefox. These moves didn’t abandon mission—they made growth possible.

OpenAI’s move keeps the nonprofit as a major equity holder and shifts operations into a public benefit corporation—a legally recognized structure that requires balancing profit with purpose.

This is not a loophole. It’s a deliberate move using frameworks that already exist in law to allow innovation to scale responsibly.

The shift, naturally, has triggered public concern—both inside and outside the organization. OpenAI laid out its rationale for the restructuring in a December 2023 post, while a group of former employees recently signed a letter to the California Attorney General urging an investigation into whether the move violates its nonprofit obligations.

The Myth of Mission as a Safety Net

There’s been a wave of panic that OpenAI’s restructuring signals the end of its mission—trading ethics for profit, building AI for shareholders, not society. That this is the first step toward profit-hungry AI overlords.

But before we leap to dystopia, let’s get clear on something:

Mission alone doesn’t keep an organization on track. Leadership does. Governance does. Reality does.

I’ve seen nonprofits bringing in hundreds of millions stay tightly aligned with purpose—not because the mission protected them, but because the people in charge did. Because systems reinforced it. Because stakeholders demanded it.

While chairing governance for the U.S. Olympic & Paralympic Committee—an organization with over $400 million in annual operations—mission wasn’t just a value, it was a system. Growth or challenge didn’t relax that focus—it reinforced it.

And I’ve seen the opposite. Organizations with noble missions quietly drift off course—not out of malice, but by chasing funding, pleasing donors, or avoiding hard decisions. The mission didn’t disappear. It just stopped guiding the choices.

For-profits drift too. Especially when short-term incentives pull harder than long-term purpose. It’s not a nonprofit problem. It’s a leadership problem.

So no, this doesn’t make OpenAI a villain. The nonprofit still holds equity. The structure remains a public benefit corporation - which, interestingly, is the same structure as Musk’s xAI. And in a field full of less principled competitors, this might be the most mission-conscious way to stay in the race.

But let’s be clear: this isn’t just a conversation about mission. It’s about structure—and the misplaced belief that structure alone safeguards intent.

The Structure Isn’t Sacred

Michael Dorff, a UCLA corporate law professor, warned that this shift could collapse charitable giving as we know it. Come on. That’s not just alarmist—it misunderstands how trust in the nonprofit sector actually works. I’ve already mentioned above that there are already transparent legal mechanisms in place for this, so this argument makes no sense.

Charitable giving doesn’t rely on legal structures alone. It relies on leadership, clarity, transparency, and a track record of impact. Most nonprofits aren’t sitting on intellectual property valuable enough to convert into a for-profit—nor are they trying to.

This is the exception, not the beginning of the end.

We’re talking about the future of artificial intelligence—not your neighborhood soup kitchen. To suggest otherwise is to confuse structure with intent—and to ignore the nuance required to lead through complexity.

The Resource Fallacy

Let’s dispel another myth: that nonprofits are somehow above the “profit motive.”

They’re not.

I’ve been in the boardrooms of nonprofits pushing hard for every dollar—not for shareholders, but for athletes, students, and communities.

The pressure to perform is real, because without resources, the mission fails.

Let’s drop the false divide: being money-motivated and mission-driven are not opposites—they're partners.

Plenty of nuance here, but ultimately, the difference is where the money goes.

For-profits serve shareholders.

Nonprofits fund programs, impact, and yes—a cash reserve.

And they need that reserve, because unlike for-profits, they can’t raise capital at scale. It’s not greed. It’s survival.

But make no mistake: both require leadership that’s relentlessly focused on growth, sustainability, and performance.

Mission doesn’t live in your tax status.
It lives in your decisions.
In your governance. In your leadership.

Can We Drop the Moral Panic Now?

If OpenAI fails to restructure, it won’t be a win for ethics—it’ll be a win for its competitors. Competitors with no mission to “misplace.” No guardrails. No nonprofit roots to honor.

And for Elon Musk, who previously attempted to acquire the company with a $97 billion bid—well below its estimated valuation—while working to stall its growth and drive down its market value.

This change may not be perfect. But it’s the most mission-aligned path available for a company at this scale, in this industry, at this moment.

Personally, if I could go back and build my nonprofit again, I’d do it as a for-profit. Not for me—for the mission, for the opportunity to reach more kids earlier, and for a clearer path to organizational stability.

The world’s moving fast. Idealism without infrastructure doesn’t scale.
And when it comes to building ethical AI… speed matters.

Let’s not punish OpenAI for trying to win the race—while still running with purpose.

- Steve