10 min
We got California to intervene about OpenAI’s corporate switch from nonprofit status. It’s time for the SEC to come to the table
by Orson Agular and Catherine Bracy
22 July, 2026
Ever since OpenAI filed its initial paperwork to become a publicly traded company, the headlines about the historic nature of this IPO, and the billions OpenAI could raise have continued pouring in. While there is no shortage of news coverage, it’s missing key details any savvy investor would want to know.
OpenAI’s founders believed that artificial general intelligence (AGI) could have transformative benefits for humanity. But they also feared it could be catastrophically dangerous if developed irresponsibly and concentrate unprecedented levels of wealth and power in the hands of a few.
That’s why they founded OpenAI as a nonprofit, with a legally enforceable duty to put the interests of the public over those of its investors. But this commitment is now under threat.
How did we come to this point? Building cutting-edge AI is expensive. To fund its charitable mission, OpenAI adopted a nonprofit/for-profit hybrid structure. It created a for-profit limited liability corporation (LLC) to raise money from investors. But importantly, written into the LLC’s founding documents is the same requirement to put the interests of the public over those of its investors.
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