OPENAI PROGRESS REPORT: YEAR ONE
It’s been one year since OpenAI struck a deal with the Attorneys General of California and Delaware that let it restructure its corporate governance and get on a path to an IPO.


That agreement, codified in a memorandum of understanding (MoU) signed with California AG Rob Bonta, left the original OpenAI nonprofit (now the OpenAI Foundation) in control of the new for-profit public benefit corporation (PBC).

Baked into the arrangement is a structural conflict of interest.  The Foundation and the PBC are governed by two boards made up of almost entirely the same people. While the nonprofit’s primary responsibility is to its charitable mission (to ensure AI benefits all of humanity), the PBC is heavily incentivized to prioritize maximizing returns for investors. These overlapping board members are supposed to ensure the nonprofit mission remains the driving governance principle even as they seek higher valuations for the PBC. 
With that setup, it was never realistic to expect OpenAI to put its nonprofit mission ahead of profits, even though the agreement and the law require it. A year of OpenAI’s behavior has proven the point.


So we checked their work and assigned them a grade.  Below are the subjects OpenAI is responsible for under the law and terms of the MoU. 
REPORT CARD
Subject:  Grade:Report:
NONPROFIT CONTROL & BOARD GOVERNANCED

Met the minimum requirements for nonprofit control, but not the intent.

SAFETY FRemoved safety from its mission and has dismantled safety teams since.
TEEN & YOUTH SAFETY  FYouth safety measures came after harm had already occurred.
TRANSPARENCY & PUBLIC REPORTING  INCOMPLETEThe public disclosures needed to evaluate its commitments have not been released.
CHARITABLE GRANTMAKING   D

Only a tiny fraction of the Foundation’s charitable promise has been paid out, despite over $200B in assets.
MISSION-ALIGNED PUBLIC ADVOCACY   FPolicy positions work against the public-benefit mission it committed to.



One Incomplete. Two D’s. Three F’s.

One year in, OpenAI has failed nearly every commitment it made to the people of California. 

In any classroom, that’s a student who needs serious intervention.

The MoU gave the Attorney General the authority to step in, and we think he should do so before the IPO makes these failures harder to undo.