Explainer | Why ChatGPT creator OpenAI plans transition to public benefit corporation

The new structure aims to potentially make OpenAI a more investor-friendly company, while maintaining a mission of funding a related charity

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OpenAI’s transition into a public benefit corporation is expected to help it raise more capital. Photo: TNS

Published: 11:48am, 28 Dec 2024Updated: 12:10pm, 28 Dec 2024

ChatGPT creator OpenAI on Friday laid out a plan to transition its for-profit arm into a Delaware public benefit corporation (PBC) to help it raise capital and stay ahead in the costly artificial intelligence (AI) race against companies such as Google.

OpenAI’s new structure aims to potentially make a more investor-friendly company, while maintaining a mission of funding a related charity.

Rivals including Amazon.com-backed Anthropic have also adopted the PBC structure to balance societal interests along with shareholder value.

OpenAI’s planned new corporate structure aims to balance societal interests along with shareholder value. Photo: AFP

What is a PBC?

While both PBCs and traditional corporations are for-profit entities, PBCs are legally required to pursue one or more public benefits, including social and environmental goals.

The state of Delaware amended its general corporation law to allow the formation of PBCs in 2013. As of December 2023, there were 19 publicly traded PBCs, according to research by Jens Dammann of the University of Texas.

In its blog, OpenAI described the current structure as “a for-profit, controlled by the non-profit, with a capped profit share for investors and employees”.

Under the new organisation, the non-profit will own shares in the for-profit, similar to outside investors, and the for-profit will fund the charitable mission of the non-profit.