Documents show OpenAI’s long journey from a nonprofit to a company valued at $157 billion

Back in 2016, a scientific research organization based in Delaware and Mountain View, California, applied to be recognized as a tax-exempt charity by the Internal Revenue Services.

The nonprofit organization, called OpenAI, told the IRS that its goal is to “advance digital intelligence in a way that most benefits all of humanity, without being constrained by the need to generate financial returns.” become.”

Its assets included a $10 million loan from one of its four founding directors and now CEO, Sam Altman.

The filing, which nonprofits are required to disclose and which OpenAI provided to The Associated Press, offers a look back at the origins of the artificial intelligence giant, which has since evolved into a for-profit subsidiary recently raised by investors at 157 Billion US dollars was valued.

This is a measure of the enormous distance that OpenAI – and the technology it researches and develops – has traveled in less than a decade.

In the filing, OpenAI said it did not intend to enter into joint ventures with for-profit organizations, which it has since done. The company also said it has “no intention to play a role in the development of commercial products or equipment” and promised to make its research freely available to the public.

An OpenAI spokeswoman, Liz Bourgeois, said in an email that the organization’s missions and goals have remained constant, although the way it accomplishes its mission has evolved along with technological advances.

Lawyers specializing in advising nonprofit organizations have been closely monitoring the meteoric rise of OpenAI and its changing structure. Some question whether its size and the scope of its current ambitions have reached or exceeded the limits of interaction between nonprofit and for-profit organizations. They also question how her core activities further her nonprofit mission, what she must do, and whether some are allowed to profit privately from her work, which is prohibited.

In general, non-profit experts agree that OpenAI has made great efforts to design its corporate structure to comply with the rules that apply to non-profit organizations. OpenAI’s filing with the IRS appears typical, said Andrew Steinberg, an attorney at Venable LLP and a member of the American Bar Association’s Nonprofit Committee.

If the organization’s plans and structure were to change, Steinberg said it would have to report that information on its annual tax returns, which it has on file.

“When the IRS reviewed the application, there was no information that the corporate structure that exists today and the proposed investment structure was consistent with their expectations,” he said. “And that’s okay, because that could have developed later.”

Here are some highlights from the application:

At first glance, OpenAI’s research plans look strange given the race to develop AI, sparked in part by the release of ChatGPT in 2022.

OpenAI told the IRS that it intends to train an AI agent to solve a variety of games. The goal was to build a robot for household chores and develop technology that could “follow complex instructions in natural language.”

Today, its products, which include text-to-image generators and chatbots that can recognize emotions and write code, far exceed those technical thresholds.

The nonprofit OpenAI said on the application form that it had no plans to enter into joint ventures with for-profit companies.

It also said: “OpenAI has no plans to play a role in the development of commercial products or devices. It intends to make its research freely available to the public on a non-discriminatory basis.”

OpenAI spokesman Bourgeois said the organization believes the best way to achieve its mission is to develop products that help people use AI to solve problems, including many products it offers for free. But they also believe developing commercial partnerships has helped advance their mission, she said.

OpenAI reported to the IRS in 2016 that regularly sharing its research results “with the public is central to OpenAI’s mission.” OpenAI will regularly publish its research results on its website and the software it develops under open source software licenses share with the world.”

It also says it “intends to retain ownership of all intellectual property rights it develops.”

The value of that intellectual property and whether it belongs to the nonprofit or for-profit subsidiary could become a major question if OpenAI decides to change its corporate structure, as Altman confirmed in September.

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