BUSINESS-ECONOMY
The nonprofit roots of OpenAI may haunt it in an expensive and inconvenient form, even as its valuation recently surged to $157 billion. Nonprofit tax specialists have been monitoring OpenAI, the maker of ChatGPT, since last November when its board expelled and then reinstated Chief Executive Sam Altman. Some believe the company may have reached - or maybe passed - the limits of its corporate structure, a nonprofit dedicated to developing AI for the good of "all of humanity" with for-profit subsidiaries under its command. When nonprofit and for-profit sides of a venture conflict, the charitable mission must always prevail, according to Jill Horwitz, a UCLA School of Law law and medicine professor who has studied OpenAI. “It’s the job of the board first, and then the regulators and the court, to ensure that the promise that was made to the public to pursue the charitable interest is kept," she said. The source told The Associated Press that the company is exploring making OpenAI a public benefit corporation, though the board has yet to make a final decision, and it is undetermined whether any change will be implemented or when. Altman recently confirmed OpenAI is considering corporate restructuring but declined to give details. If the nonprofit loses control of its subsidiaries, then some experts estimate that OpenAI may be liable for the interests and assets that the nonprofit had held. To date, most observers agree that OpenAI has carefully managed the relationships between the nonprofit and its other entities to try to avoid that. Still, they also expect the regulators to take a close look at OpenAI, regulators including the Internal Revenue Service and state attorneys general in Delaware, where it's incorporated, and in California, where it operates. Bret Taylor, chair of the OpenAI nonprofit’s board, said in a statement that the board was focused on fulfilling its fiduciary obligation. “Any potential restructuring would ensure the nonprofit continues to exist and thrive, and receives full value for its current stake in the OpenAI for-profit with an enhanced ability to pursue its mission,” he said. This article includes reporting from Associated Press Finance. None
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