Strengthening Boards to Navigate the Intersection of Profit and Purpose

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When Sam Altman was ousted as CEO of OpenAI in November 2023, the tech start-up's entire board of directors resigned.

Altman returned as CEO in March 2024, but the tech start-up has been mired in controversy ever since, with investigations and lawsuits surrounding its governance structure.

Now, the Southern Poverty Law Center is out with a report on OpenAI's hybrid governance structure, in which the nonprofit board oversees the commercial side of the company while its for-profit subsidiary, ChatGPT, develops AI products.

The nonprofit board "acts as a guardrail for the organization's strategic attention," the report states, while the for-profit subsidiary's board members "might devote more time and resources to increasing revenue than to achieving the organization's social mission."

The nonprofit board's mission is "ensuring that artificial general intelligence'ensuring that artificial general intelligencebenefits all of humanity'while the organization simultaneously pursues the commercial opportunities of developing cutting-edge generative AI products," per the SSIR report.

But OpenAI isn't the only company to experiment with such a structure.

Patagonia, for example, announced in 2022 that it was transferring all voting stock to a trust and all nonvoting stock to a nonprofit

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