Inside the Battle Over OpenAI’s Corporate Restructuring

Late last year, Bell, Blackwell, and Aguilar decided to dust off the old playbook. They commissioned a legal memo that reiterated the power of the attorney general over the irrevocable status of charitable funds and called up their contacts to form a coalition of what is now over 50 community organizations working together to try to influence the future of one of the hottest tech companies in the world.

Blackwell says some members of the group are concerned that OpenAI’s plans could threaten the integrity of the nonprofit sector as a whole. Donors, they argue, may be reluctant to continue contributing if they feel that money earmarked for the public good could be peeled off into for-profit pursuits.

The coalition urged California attorney general Rob Bonta to carefully review the OpenAI conversion and launched a campaign in January to attract public attention to the issue. The effort has garnered widespread support, including from some former OpenAI employees and AI researchers, who have also urged Bonta’s counterpart in Delaware—where OpenAI is chartered—to ensure its mission isn’t undermined by the restructuring. (Both attorney general’s offices have said they are investigating the matter but provided few details.)

By March, OpenAI wanted to meet with Aguilar’s advocacy coalition. At the San Francisco Foundation’s offices, Blackwell, Aguilar, and another coalition leader sat down with two of OpenAI’s global affairs staffers, including Debbie Mesloh, a former senior adviser to then-California attorney general Kamala Harris.

OpenAI’s Held says the meeting raised a “number of misconceptions about our corporate structure—many of which seemed to echo those voiced by Musk.” Aguilar says OpenAI wanted feedback on evolving its nonprofit mission. But left unaddressed were core questions about the amount of funding and independence OpenAI would afford to the charitable arm.

‘Big Damn Deal’

Another attendee at the meeting was Daniel Zingale, a retired former adviser to several California governors who is now consulting for OpenAI. Mesloh and other company leaders who had known Zingale from California politics wanted his help convening a group of luminaries from the philanthropic world to give advice about how OpenAI should spend its charitable funds and distribute its technology to other nonprofits. In 2023, OpenAI’s current nonprofit arm gave out over $2.6 million in grants, including to education institutions, AI safety groups, and economics researchers.

Zingale says the advocacy by Aguilar’s outside coalition helped play a role in the founding of OpenAI’s advisory commission, which began meeting April 21 and whose recommendations are due by July 20. (OpenAI spokesperson Held says the commission was born out of a long-held “desire to engage in more ways with the wider nonprofit community.”) Whether the commission ultimately tackles the concerns raised by the activists remains unclear.

Its members include veteran political adviser Jack Oliver, former media executive Monica Lozano, and 95-year-old labor activist Huerta. They did not respond to requests for comment.

Zingale also helped recruit Robert Ross, who previously spent about a quarter century as CEO of the California Endowment, one of the nonprofits that emerged from the health care conversions of the ’90s. Ross says his former organization is widely recognized as a nonprofit-to-profit conversion success, and he wants the same to be true of OpenAI.

“This is a big damn deal in civic and political circles that will have enormous consequences for civic society and marginalized and underserved communities,” Ross says. “Our task is more on the spending side—how should the assets be deployed. However, it’s incomplete if we don’t speak to issues of governance. I suspect you’ll see a report that will speak to both issues.”

Aguilar says he is skeptical of the advisory panel’s efforts. Though the commission is supposed to come up with recommendations for how OpenAI can help ensure everyone has the opportunity to benefit from AI tools, Zingale and Ross both say they have little experience using AI themselves.

“This is a fascinating endeavor for me, because what I know about AI could fit into a thimble,” says Ross, adding he is eager to learn from others who are more knowledgeable.