Nonprofit tax experts have been closely watching OpenAI, the creator of ChatGPT, since November of 2023 when its board dismissed CEO Sam Altman and reinstated him shortly thereafter. Many believe that the company may have reached, or exceeded, the limits of its corporate structure, under which it is organized as a nonprofit whose mission is to develop artificial intelligence to benefit “all of humanity” but with for-profit subsidiaries under its control.

Founding faculty director of the Lowell Milken Center for Philanthropy and Nonprofits, Jill Horwitz, offered valuable insight as a professor of law and medicine at UCLA Law School who has studied Open AI. Horwitz stated that when two sides of a joint venture between a nonprofit and a for-profit come into conflict, the charitable purpose must always win out.

“It’s the job of the board first, and then the regulators and the court, to ensure that the promise that was made to the public to pursue the charitable interest is kept,” she said.