Cheng-Chi Chang (Emory U Law) and Yilin “jenny” Lu (U Florida Levin College Law) have posted “Balancing Mission and Market: OpenAI’s Struggle With Profit vs. Purpose” (6 Corporate and Business Law Journal (Arizona State University) 1 (2025)) on SSRN. Here is the abstract:
This article examines OpenAI’s unique organizational structure, which juxtaposes its non-profit mission with for-profit business practices, and the legal and ethical implications arising from this hybrid model. Initially established under Section 501(c)(3) of the Internal Revenue Code to advance artificial general intelligence (AGI) for the collective benefit of humanity, OpenAI has increasingly integrated commercial interests, leading to the creation of a for-profit subsidiary, OpenAI LP. This evolution has sparked scrutiny regarding the alignment of OpenAI’s activities with its original charitable objectives.
The article is structured in three parts. Part I outlines the legal framework governing 501(c)(3) organizations, emphasizing the conditions under which they may establish for-profit subsidiaries while maintaining tax-exempt status. Part II explores the shifts in OpenAI’s mission statements, the consolidation of CEO Sam Altman’s influence, and the deepening relationship with Microsoft, which has invested heavily in OpenAI and gained significant strategic influence. This section also addresses the controversies surrounding increased secrecy in OpenAI’s operations, particularly concerning AGI safety and ethical considerations. Part III discusses the potential ramifications of OpenAI losing its non-profit status, including the legal requirements for distributing its charitable assets and the precedent set by the conversion of charitable healthcare organizations into for-profit entities. Part IV explores future implications and recommendations, proposing innovative governance structures, tailored regulatory approaches, and global frameworks for overseeing AGI development.
By analyzing OpenAI’s trajectory, this article contributes to the broader discourse on the governance of non-profit entities engaged in high-stakes technological development. It underscores the importance of balancing innovation with ethical responsibilities, ensuring that the pursuit of AGI does not compromise the foundational mission of benefiting humanity. The article concludes by emphasizing the need for comprehensive legal, ethical, and governance frameworks to address the unique challenges posed by organizations operating at the intersection of cutting-edge AI technology and public benefit.