OpenAI's Nonprofit Arm Showed Revenue of $45,000 Last Year

Despite being valued at $86 billion by private investors, OpenAI reported $44,485 in revenue in 2022, almost entirely from investment income. CNBC reports: That's from the nonprofit parent's 990 filing with the Internal Revenue Service, a form that has to be filled out by organizations wishing to maintain their tax-exempt status. Federal standards don't require audited financial statements from nonprofits. In its home state of California, OpenAI was able to avoid submitting audited financials for 2022 because the foundation's stated revenue was below the $2 million reporting threshold. The last time OpenAI filed with the state was 2017, when revenue was $33.2 million, or more than 700 times what the foundation reported for 2022.

For all its talk of openness, OpenAI's financials remain a black box. Created as a nonprofit in 2015, OpenAI launched a so-called capped-profit entity in 2019, enabling it to raise billions of dollars in outside funding and attain attributes of a tech startup, such as the ability to hand out equity to employees. The for-profit side of the house went on to develop ChatGPT, the chatbot that took the world by storm late last year and kicked off the generative AI boom.

Thad Calabrese, a professor of public and nonprofit financial management at New York University, said OpenAI's current status is confusing, and is unlike anything he has seen in the nonprofit world. He said OpenAI could give up its nonprofit status, and he cited the Blue Cross Blue Shield Association, which in 1994 allowed associated nonprofit medical insurance plans to switch into for-profit entities. 'There's no real need to have the nonprofit,' Calabrese said. 'If you want to be a startup, be a startup.' Regarding OpenAI's reporting with the IRS, he said 'fundamentally you can't really get a holistic sense of these organizations when you don't have consolidated financial statements.'

Read more of this story at Slashdot.