Why the $130 Billion OpenAI Foundation Has Other Nonprofits on Edge

With charitable assets valued at roughly $130 billion, the OpenAI Foundation is now the largest nonprofit organization in the United States. Its rise has come with an unusually high-stakes set of questions over nonprofit accountability, governance, and the future of tech-linked philanthropy.

The maker of ChatGPT finalized a controversial restructuring last October. During that process and in the months since, it’s been a source of concern for nonprofit and foundation leaders who say its unusual structure blurs the boundaries between philanthropy and corporate power.

The foundation is tightly linked to OpenAI’s for-profit business and shares all but one board member with the company. Because it is not actually a foundation, it is not required to pay out a minimum share of its assets each year — so nonprofits can’t necessarily expect any windfalls from its huge reserves. It has also issued subpoenas to nonprofit critics as part of ongoing litigation tied to its restructuring. Together, those features have unsettled nonprofit and foundation leaders watching the deal closely.

“The big question moving forward is accountability: Is this a true foundation or is it just a drawer on Sam Altman’s desk?” said Orson Aguilar, CEO of LatinoProsperity and a leader of the Eyes on OpenAI coalition, which formed after the company explored shedding nonprofit control altogether.

The concern is not just theoretical. Much of the foundation’s roughly $130 billion valuation exists on paper from a 26 percent equity stake in OpenAI’s business, not as cash available for grant making.

The organization has begun making grants, including a recent $40.5 million round for nonprofits working on civic engagement and work-force development. But some philanthropic leaders argue that early giving does little to resolve deeper questions about governance and independence.

Don Howard, president and CEO of the James Irvine Foundation, a California-focused grant maker committed to ensuring low-income workers have the power to advance economically, called the initial grants “an embarrassingly small amount of money to commit to nonprofits” given OpenAI’s resources.

Attorneys general in California and Delaware (where the company is headquartered and incorporated) approved the restructuring last October, attaching oversight conditions while acknowledging concerns about conflicts of interest and board independence.

OpenAI, which did not respond to questions from the Chronicle, has said the nonprofit arm exists to ensure that artificial intelligence benefits humanity and that retaining equity and governance control allows the foundation’s philanthropic capacity to grow alongside the company’s commercial success. 

But nonprofit advocates say that what happens next will reverberate far beyond one company. These issues are playing out amid broader anxiety in the nonprofit world about the shifting nature of Silicon Valley philanthropy, as tech billionaires abandon earlier giving priorities and a new generation of companies amasses unprecedented wealth. Now the nation’s largest nonprofit could set a precedent for a new form of corporate philanthropy.

Tied Together ‘at the Ankles’

When OpenAI began exploring new structures that could weaken or eliminate nonprofit control, following the abrupt and brief firing of CEO Sam Altman in late 2023, a new pressure campaign began to come together.

Nonprofit leaders, civil-rights groups, labor advocates, and foundations organized what became the Eyes on OpenAI coalition, now comprising more than 60 organizations. Their concern was not merely corporate governance but whether charitable assets created for public benefit would be preserved for public interest purposes.

If the OpenAI Foundation’s scale has drawn attention, its governance structure is what has most alarmed nonprofit leaders and watchdogs. 

The OpenAI Foundation remains deeply intertwined with OpenAI’s for-profit business. It serves as the nonprofit parent of the company, retains formal governance authority, and holds a 26 percent equity stake that accounts for most of its valuation. The nonprofit and public-benefit corporation have largely overlapping boards.

“That does not speak to independent decision-making,” said Judith Bell, chief impact officer at the San Francisco Foundation. “They’re tied together, not just at the hips but at the ankles.”

For Bell and others, the structure recalls earlier nonprofit conversion battles in California’s health-care sector — with some crucial differences.

In the 1990s, nonprofit insurers were allowed to become for-profit companies only after their charitable assets were permanently preserved for the public good. Those deals resulted in independent institutions such as the California Endowment, the California Wellness Foundation, and the California Health Care Foundation, each governed separately from the companies that generated the wealth.

Those fights, Bell said, established core principles: Nonprofit assets are public charitable assets, owned by the public rather than founders or executives, and must be protected through independent governance.

But OpenAI’s restructuring jettisons that model. She is concerned that, while the nonprofit assets were preserved on paper, it remains tightly bound to the company itself through shared leadership, governance, and financial dependence. Earlier conversion agreements deliberately avoided that kind of entanglement.

As one of its next steps, the Eyes on OpenAI coalition will step up its advocacy to push the OpenAI Foundation to diversify its assets in case the AI bubble bursts. Because the nonprofit’s fortunes remain deeply tied to a single company, its assets could shrink if AI valuations fall or grow even larger if OpenAI pursues an eventual IPO, a possibility the company has publicly explored.

From OpenAI’s perspective, that tight coupling is not a flaw but a feature.

In a blog post announcing the restructuring, board chair Bret Taylor argued the model aligns commercial success with charitable impact. “The more OpenAI succeeds as a company,” Taylor wrote, “the more the nonprofit’s equity stake will be worth, which the nonprofit will use to fund its philanthropic work.”

Some observers have drawn comparisons to the Novo Nordisk Foundation, the Denmark-based philanthropic giant often cited as the world’s wealthiest nonprofit. The foundation controls pharmaceutical companies behind blockbuster diabetes and weight-loss drugs and uses its ownership stake to fund large-scale scientific research and global health initiatives. That structure is more common in Europe.

But critics note key differences. The Novo Nordisk Foundation operates with a fully independent board and long-established norms about transparency and large predictable annual grant distributions.

Aguilar echoed that concern, saying it is difficult to reconcile how with essentially the same board, OpenAI can adhere to a charitable mission while also maximizing profits for a commercial entity.

Grant Making and Critiques

The governance concerns have sharpened scrutiny of the foundation’s early grant making.

Several nonprofit leaders said the one remaining question is whether OpenAI’s giving and transparency will begin to resemble what nonprofits expect from a funder of this size. Despite its name, the OpenAI Foundation is not a private foundation. It is legally structured as a public charity and is not subject to the 5 percent annual payout requirement that governs most large foundations.

Some critics argue that the OpenAI Foundation risks functioning less like a traditional charitable institution and more like a company-directed giving vehicle.

Catherine Bracy, founder and CEO of the nonprofit TechEquity, was more blunt, describing the foundation as “a glorified corporate social responsibility program, whether they’re spending $50 million or $50 billion.”

In December, the OpenAI Foundation announced $40.5 million in unrestricted grants from its $50 million People-First AI Fund to more than 200 nonprofits working in areas such as civic engagement, AI literacy, and work-force development. That was among the recommendations of OpenAI’s nonprofit commission, a temporary advisory group convened last spring as the company weighed its restructuring options.

OpenAI brought together a group of current and former nonprofit leaders — including Robert Ross, former CEO of the California Endowment, and labor organizer Dolores Huerta — to provide nonbinding guidance on how the company should steward its charitable assets. The commission held a series of forums across California, inviting community and civic leaders to share concerns about AI’s impact and what role OpenAI’s philanthropic enterprise should play in addressing them.

Ross, who previously helped lead the conversion that created the California Endowment, said the commission was convened at a moment when OpenAI was being forced to confront a basic question: how to operate a philanthropic enterprise of unprecedented scale while pursuing rapid commercial growth.

Inside the company, he said, “you can see there’s this epic struggle between mission and profit,” one that will shape whether the group meaningfully serves the public interest or becomes secondary to commercial goals. “This is philanthropy’s epic struggle of the day,” Ross said.

For one recipient of that round of funding, the experience was unremarkable, and in many ways more streamlined than the process at other grant makers. PICO California, a faith- and community-based organizing network and member of the Eyes on OpenAI coalition was selected to receive $450,000 in general-support funding, according to executive director Joseph Tomás McKellar.

McKellar said the grant came with no advocacy restrictions beyond standard 501(c)(3) guidelines and involved relatively light application requirements.

PICO plans to remain active in the coalition, McKellar said, and to continue urging the OpenAI Foundation to expand its grant making. “This should only be the beginning,” he said in an email.

Beyond recommending the $50 million community fund, the commission’s report also called for greater transparency, stronger engagement with affected communities, and clearer separation between OpenAI’s charitable mission and its commercial imperatives. The group disbanded after issuing its report and does not have an ongoing role in overseeing the foundation.

Late last year, OpenAI also introduced a smaller $2 million research grant program focused on studying AI harms. While some observers welcomed the effort, others criticized it as “grantwashing,” saying that small-scale funding risks entangling researchers in conflicts of interest and forestalling independent inquiry into AI harms while leaving the largest risks unaddressed.

The nonprofit’s website pledges an initial $25 billion commitment across two areas: health and curing diseases and “technical solutions to AI resilience.” OpenAI declined to provide more details about the timeline for disbursing those funds.

At the time of publication, an OpenAI spokeswoman did not respond to questions about what formal grant-making infrastructure the OpenAI Foundation has established, how it plans to roll out future giving, or what expectations it has for annual grant making relative to its $130 billion in assets.

In 2024, the year before the restructuring, OpenAI made $7.5 million in grants, Bloomberg reported.

Oversight, Subpoenas, and Power Imbalances

It is never easy for nonprofits to critique grant makers — there are always risks of losing out on funds or alienating powerful figures who can make or break an organization’s future. Some members of the Eyes on OpenAI coalition say they have faced even starker pushback. 

As the coalition’s scrutiny of the group intensified, OpenAI issued subpoenas to several nonprofits including coalition members, like the San Francisco Foundation, seeking internal communications related to their organizing and funding and looking for ties to Elon Musk. The subpoenas were issued as part of OpenAI’s ongoing lawsuit with Musk, an early donor and OpenAI co-founder, who sued the company seeking $134 billion in damages and has challenged its restructuring and governance.

Nonprofit leaders said the requests were unusual and unsettling, particularly given OpenAI’s resources.

Advocates saw the subpoenas as intimidation that could undermine their credibility by insinuating ties to Musk and underscored the power imbalance between one of the world’s most valuable tech companies and the nonprofits seeking to influence its charitable direction.

Ross called the subpoenas “distressing” and was troubled by what they signal to the broader nonprofit community.

“It’s an indicator of some of the hyper competitive culture that the world of AI is functioning in,” said Ross.

Reverberations Far Beyond California

For nonprofit leaders, the stakes extend far beyond one company.

“If OpenAI succeeds in this conversion without meaningful accountability, we’re essentially telling every social entrepreneur that the nonprofit structure is just a temporary convenience,” said Aguilar, with LatinoProsperity, “that it’s a way to attract talent and trust, and then, if you become valuable, you can cash out.”

If the nation’s largest nonprofit organization can operate without minimum payout requirements, independent governance, or permanent accountability mechanisms, advocates worry that similar models could proliferate. That could reshape philanthropy, making it more closely aligned with corporate growth strategies and harder for communities to challenge harm.

Howard, with the James Irvine Foundation, warned that a $130 billion nonprofit being called a foundation, with no obligation to distribute the public-benefit resources it controls, represents “a significant development in the social sector that deserves everyone’s attention.”

The Eyes on OpenAI coalition is now weighing its next phase and how its members could continue to play a role as watchdogs or advocates.

“Clearly, $130 billion is a lot, it’s a big valuation and has huge potential,” Aguilar said. “It’s going to be up to civil society, nonprofit sectors to ensure that this $130 billion foundation truly benefits society.”