In 2016, OpenAI, a nonprofit organisation based in Mountain View, California, applied for tax-exempt status with the IRS. Its goal was to advance digital intelligence for the benefit of humanity without the need for financial return. The application revealed its beginnings, including a $10 million loan from one of its founding directors, Sam Altman, who is now the CEO.
Initially, OpenAI stated that it would not engage in joint ventures with for-profit organisations or develop commercial products. The organisation intended to make its research freely available to the public. However, it has since formed a for-profit subsidiary that has been valued at $157 billion by investors. This has raised concerns about compliance with nonprofit regulations.
Liz Bourgeois, a spokesperson for OpenAI, stated that while the organisation’s missions and goals have remained constant, its methods have evolved with technological advancements. Some legal experts have questioned whether OpenAI’s current scale and ambitions comply with nonprofit regulations. They are particularly concerned about whether the organisation’s activities are primarily advancing its charitable mission and whether individuals are benefiting privately.
Despite these concerns, nonprofit experts believe that OpenAI has taken steps to comply with the rules governing nonprofit organisations. However, as the organisation’s structure and investment strategies evolve, it must continue to report these changes to the IRS. OpenAI’s early research goals focused on developing AI agents for game-solving, household robots, and technology capable of following complex instructions in natural language. Today, its products far exceed those initial goals.
OpenAI originally stated that it had no plans to collaborate with for-profit entities or develop commercial products. The organisation believed that sharing research with the public and making software available under open-source licenses were essential to its mission. However, it has since engaged in commercial partnerships to further its goals.
Regarding intellectual property, OpenAI expressed its intention to retain ownership of any intellectual property developed. The question of intellectual property ownership may become significant if OpenAI decides to change its corporate structure, as CEO Sam Altman suggested in September.
Overall, OpenAI’s journey from a nonprofit research organisation to a complex entity with for-profit subsidiaries has raised compliance concerns. While the organisation has adapted to evolving technologies and partnerships, questions remain about its adherence to nonprofit regulations and its primary charitable mission. As OpenAI continues to grow and evolve, it must ensure transparency and compliance with the rules governing nonprofit organisations.
