To Be or Not to Be a Nonprofit? Or Wait: Public Benefit Corporation
OpenAI as a Living Example of Deep Enterprise Design in Action
By Marjorie Kelly
May 23, 2025
This article was originally published in B The Change on May 14, 2025.
We have lived so long with the dominant model of capital ownership of companies — like publicly traded companies and increasingly those owned by private equity — that it’s hard for most of us to imagine any other model could actually work at scale in the world of rough-and-tumble capitalism. An intriguing example unfolding in real time is OpenAI, the maker of ChatGPT, which many consider to be the most influential artificial intelligence company in the world. It’s currently wrestling with the third incarnation of what I call its “deep enterprise design” — the design of who holds power and toward what end. Much hangs in the balance. And meanwhile, it’s a fascinating time to take a ring-side seat as the answers unfold.
Here’s the challenge: In one of the fastest-growing fields ever — with many billions of investor dollars flooding in and competitive pressures fierce from behemoth firms like Google and Meta — is it possible to create a deep enterprise design focused on putting the public good ahead of maximum investor returns? And if so, is it possible to then succeed in steering the company to carry out that mission, not just give it lip service?
The story began in late 2015 when Sam Altman, Elon Musk, and others founded OpenAI as a nonprofit with a mission of building artificial intelligence that benefits humanity. You might recall that in the fall of 2024, the nonprofit board controlling the firm found CEO Altman was drifting from mission and tried to fire him. But it failed. Let’s call that Design One: Nonprofit Control.
Design Two: Traditional Investor Control (which never fully materialized): Altman tried to escape nonprofit control and turn the company into one controlled by investors, by buying the firm from the nonprofit. Keep in mind why Altman found nonprofit control awkward: Open AI was/is a for-profit operation with massive investors (including Microsoft), hundreds of workers, millions of customers, and billions in revenue — all of it overseen by a nonprofit with two employees.
That brings us to the recent announcement by OpenAI of Design Three: Public Benefit Corporation (PBC). This model of state-level incorporation — first legally enacted in Maryland in 2010, and since adopted in 36 other states — involves a legally binding commitment by a firm to serve the public good while also serving shareholders. It’s a model of incorporation that was initially designed by B Lab, creator of B Corporation Certification, a process and network of companies aimed at making business a force for good.
Here’s why this matters — why in fact it’s a huge deal: The PBC model takes a firm step away from maximizing gains for investors as the purpose of the firm while still allowing a firm to have investors and provide good returns. It marks the difference between profit-making and profit-maximizing. Such a commitment should push OpenAI to more effectively tackle the massive water and energy usage of AI, two environmental justice issues that the industry has failed to address adequately thus far. As I saw over 20 years as founder and president of Business Ethics magazine, it’s in the unrestricted, hyper-focused pursuit of maximizing gains to capital where companies go off the rails, lose their minds, and become too often a net drain on society and ecosystems rather than a net contributor.
The PBC model represents a step toward the possible future of the corporation. That makes the struggle by OpenAI worth watching.
Certifying as a B Corp is a major milestone and accomplishment — but it is just one part of a company’s ongoing impact improvement journey. This downloadable guide features information for people new to or curious about the Certified B Corporation community.
That being said, the PBC model is not yet a complete enterprise design. It’s a beginning step away from the shareholder-primacy paradigm toward the emerging new paradigm of next-generation enterprise design. In my book Owning Our Future, I showed how each paradigm is defined by five elements of deep enterprise design: the true purpose of a business, and how that purpose is manifest and protected in its governance structure, empowered in its ownership model, supported by networks of related businesses, and given precedence over the relentless demands of finance. It is in redesigning these core elements that true transformation takes place. The more next-generation elements involved, the stronger the design.
With the PBC form of incorporation for OpenAI, a purpose of serving the public good is legally established. Ownership is still being worked out, with OpenAI now negotiating the nonprofit’s stake in the new corporation. The best approach might be the creation of dual-class shares, with what I term “mission shares,” with super-voting rights, held in the hands of a selected mission steward team. Such shares are not for sale. The New York Times has such a structure, enabling it to trade shares publicly while protecting its mission.
In terms of governance, whether the nonprofit will select the board is also now being negotiated. A majority of seats for mission stewards is essential. Finance is the wild card here; investors will desire high returns and will wield pressure toward that end. Legal empowerment of mission through board seats, enabling strong and assertive governance, will be required. Being a part of the network of other PBCs can help the firm navigate challenges ahead and learn from peers such as Patagonia, Amalgamated Bank, Ben & Jerry’s, Warby Parker, and Athleta.
Economist Kate Raworth, author of Doughnut Economics, her colleague Erinch Sahan of the Doughnut Economics Action Lab (DEAL), and I have worked together to further elaborate on next-generation enterprise design. DEAL has created a tool, using the five elements of design, to help business shape themselves to be regenerative and redistributive. Hundreds of businesses, including B Corps, are using these tools to reimagine their purpose and structure.
What’s under way in our time, and in the OpenAI drama, is a process of prototyping the future — showing how (and if) business can in reality be a force for good. My sense is it can, and research that my colleagues and I have done at The Democracy Collaborative shows that many businesses already demonstrate the truth of that. The OpenAI case takes the question to a whole new level. I plan to stay tuned.
Marjorie Kelly is Distinguished Senior Fellow at The Democracy Collaborative and author of the recent book Wealth Supremacy. B Lab Co-Founder Jay Coen Gilbert credits Kelly’s first book, The Divine Right of Capital, with inspiring the creation of the Certified B Corporation movement.
