OpenAI, the artificial intelligence startup valued at $86 billion, has recently disclosed financial information through its nonprofit parent’s 990 filing with the Internal Revenue Service (IRS). According to the filing, OpenAI reported revenue of just $44,485 for the year, a meager sum compared to its high valuation. The filing has raised questions about the transparency and financial practices of the organization. OpenAI’s financials have been a subject of scrutiny, given its transition from a nonprofit to a capped-profit entity in 2019, allowing it to secure significant external funding. The for-profit arm of OpenAI, responsible for developing ChatGPT, has contributed to the startup’s popularity and market value.
The IRS filing reveals limited financial details, and federal standards for nonprofits do not mandate audited financial statements. OpenAI’s ability to avoid submitting audited financials in California for 2022 has further contributed to the lack of clarity regarding its financial performance. Reports suggest that OpenAI generated $28 million in revenue in the previous year and is anticipated to approach $1 billion in 2023, primarily due to the success of ChatGPT.
OpenAI’s recent upheaval, including the abrupt firing and reinstatement of CEO Sam Altman, has led to concerns about its governance and whether it should continue as a nonprofit. The organization has committed to enhancing its governance structure, but specific changes have not been detailed. Critics argue that the current status of OpenAI is confusing and unprecedented in the nonprofit sector, questioning the necessity of maintaining nonprofit status if the organization functions more like a startup.
The lack of consolidated financial statements and limited transparency in OpenAI’s financial reporting have fueled calls for greater openness and clarity. The confusion surrounding the organization’s status and governance underscores the need for a more transparent approach, especially given its significant impact on the AI industry and its mission to ensure that artificial general intelligence benefits humanity.