In 2016, a scientific research organization incorporated in Delaware and based in Mountain View, California, filed to be recognized as a tax-exempt charity by the Internal Revenue Service.
The nonprofit, called OpenAI, told the IRS its goal was to “advance digital intelligence in a manner that most benefits humanity as a whole, without being constrained by the need to generate financial returns.”
Among its assets was a $10 million loan from one of its four founders and current CEO, Sam Altman.
The filing, which nonprofits must make public, which OpenAI provided to The Associated Press, offers a look back at the origins of the artificial intelligence giant that has since grown into a profitable subsidiary recently valued by investors at $157 billion.
It’s a measure of how far OpenAI — and the technology it researches and develops — has come in less than a decade.
In its filing, OpenAI said it has no plans to enter into joint ventures with for-profit organizations, which it has since done. The company also said it “does not seek to have a role in the development of commercial products or devices” and pledged to make its research freely available to the public.
OpenAI spokesperson Liz Bourgeois said in an email that the organization’s mission and goals have remained the same, though the way it carries out its mission has evolved with advances in technology.
Lawyers who specialize in advising nonprofits are keeping a close eye on OpenAI’s meteoric rise and its changing structure. Some question whether the size and scale of its current ambitions have reached or exceeded the limits of how nonprofits and for-profits can interact. They also question the extent to which its primary activities advance its charitable mission, what it is required to do, and whether some can profit privately from its work, which is prohibited.
In general, nonprofit experts agree that OpenAI has done everything it can to design its corporate structure to comply with nonprofit rules. OpenAI’s filing with the IRS seems typical, says 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 changed, it would have to report that information on its annual tax return, Steinberg said, which it did.
“When the IRS reviewed the application, there was no information that the current corporate structure and the investment structure that they were pursuing was what they had in mind,” he said. “And that’s OK, because that may have happened later.”
Here are some highlights from the filing:
At first, OpenAI’s research plans seem odd in light of the race to develop AI, which was fueled in part by the release of ChatGPT in 2022.
OpenAI told the IRS that it planned to train an AI agent to solve a wide range of games. The goal was to build a robot that could do housework and develop technology that could “follow complex natural language instructions.”
Today, its products include text-to-image generators and chatbots that can detect emotions and write code that far exceeds technical thresholds.
The nonprofit Open AI said in its filing that it had no plans to enter into joint ventures with for-profit entities.
It also wrote: “OpenAI does not intend to have a role in the development of commercial products or devices. It intends to make its research freely available to the public on a nondiscriminatory basis.”
OpenAI spokesperson 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 it also believes that developing commercial partnerships has helped advance its mission, she said.
OpenAI told the IRS in 2016 that regularly sharing its research “with the general public is central to OpenAI’s mission. OpenAI will regularly publish its research results on its website and share the software it has developed with the world under open source software licenses.”
It also wrote that it “intends to retain ownership of all intellectual property it develops.”
The value of that intellectual property and whether it belongs to the nonprofit or its for-profit subsidiary could become important questions if OpenAI decides to change its corporate structure, as Altman confirmed in September it was considering.
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The Associated Press and OpenAI have entered into a licensing and technology agreement that gives OpenAI access to some of the AP’s text archives.