Opinion
You Can Separate a For-Profit Company From a Nonprofit. I Helped Do It
Create separate boards and give the nonprofit influence, but not control, over the fate of the for-profit company.
In the turmoil around the firing and rehiring of former OpenAI CEO Sam Altman, many people have looked to OpenAI’s complex governance structure, which marries its original nonprofit mission with a rapidly growing for-profit company now generating revenue at a pace exceeding $1 billion a year.
OpenAI’s structure is indeed complex: It is a nonprofit that owns a holding company that owns the majority of a for-profit company but controls that for-profit company through another limited liability company that the nonprofit also owns. What’s more, Microsoft owns a piece of the for-profit company, but employees and other investors own a piece of the holding company that owns the for-profit (and not the for-profit itself).