OpenAI, which was created as a nonprofit in 2015, launched a capped-profit entity in 2019, allowing it to raise billions in outside funding and operate like a tech startup. However, its financials remain unclear. Thad Calabrese, a professor of public and nonprofit financial management at NYU, suggested that OpenAI could relinquish its nonprofit status, citing the example of the Blue Cross Blue Shield Association which transitioned into for-profit entities in 1994. He also criticized the lack of consolidated financial statements, making it difficult to get a comprehensive understanding of such organizations.
Key takeaways:
- Despite being valued at $86 billion by private investors, OpenAI reported only $44,485 in revenue in 2022, primarily from investment income.
- OpenAI was able to avoid submitting audited financials for 2022 in California because its stated revenue was below the $2 million reporting threshold.
- OpenAI's financials remain unclear, despite its talk of openness. It launched a capped-profit entity in 2019, allowing it to raise billions in outside funding and behave like a tech startup.
- Thad Calabrese, a professor at New York University, suggested that OpenAI could give up its nonprofit status, citing the example of the Blue Cross Blue Shield Association which allowed associated nonprofit medical insurance plans to switch into for-profit entities in 1994.