OpenAI's Non-profit Arm Netted Less Than $45,000 Last Year

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OpenAI's non-profit arm reported revenues of just $44,485 in its latest US tax filing, despite its for-profit business likely making millions from ChatGPT.

Founded in 2015, the startup was initially a non-profit organization focused on developing AI for the benefit of humanity. In 2019, it spun out a for-profit side led by CEO Sam Altman and began building commercial products, leading some to question whether the outfit’s employees had become now more interested in making money than building safe AI.

Now, the company's odd structure is back under the spotlight. In its latest Form-990 document [PDF], the non-profit unit is revealed as technically exempt from paying income tax and submitting audited financial statements for 2022 as it made less than the $2 million limit that triggers additional reporting requirements. Meanwhile, its larger for-profit side, however, could reportedly reach a valuation of $90 billion.

Earlier this year, Microsoft invested $10 billion for a 49 percent stake into the company. OpenAI reiterated at the time that it was still governed by its non-profit side.

"While our partnership with Microsoft includes a multibillion-dollar investment, OpenAI remains an entirely independent company governed by the OpenAI Nonprofit. Microsoft is a non-voting board observer and has no control. And, as explained above, [artificial general intelligence] AGI is explicitly carved out of all commercial and IP licensing agreements," the org previously stated.

It's unclear how much revenue OpenAI’s for-profit business makes, although its revenue reportedly reached $28 million last year. It’s possible they grew quickly in 2023 with the release of GPT-4, its latest large language model powering its most powerful version of ChatGPT, which it's selling to subscribers and enterprises.

Despite being governed by its non-profit arm, private investors have pledged to invest billions of dollars into OpenAI. Other tech companies that are led by a non-profit organization, like the Firefox browser-maker Mozilla, haven't accepted money from venture capital firms or private investors.

In remarks shared with CNBC, Mozilla Foundation's President Mark Surman called out OpenAI's corporate structure, and said: "I don't know at this point that this is a regulatory oversight issue. I think this is a public trust issue. If they want to be seen as this public institution making sure AI is in the service of humanity, we need a lot more transparency. We need to know what's going on."

The Register has asked OpenAI for comment.

OpenAI's organizational structure and relationship with Microsoft is also being investigated by trade regulators. Last week, the UK's Competition and Markets Authority, and the US Federal Trade Commission, said they were debating whether to investigate whether OpenAI's partnership with Microsoft counts as a merger, and whether such a deal might have violated antitrust laws. ®