OpenAI's Nonprofit Arm Showed Revenue of $45,000 Last Year (cnbc.com) 20
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."
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."
Libelous subject (Score:3)
Eliza was a chatbot that simulated a Rogerian Therapist.
Should we call this one ... Sigmund Fraud?
The source. (Score:2)
The source of all that intelligence, is humans.
Humans assuming THAT source was going to result in some divine premium product, isn't fraud. It's ignorance.
Re: (Score:2)
We're talking about a very different kind of fraud here.
Re: (Score:2)
"chatgpt, please come up with a business plan that allows us to be a nonprofit for tax purposes while being worth $80 billion"
"well, first..."
OpenAI is a lie (Score:3)
There's nothing "open" about OpenAI. They are exploiting the common meaning of open software. If you assume a bad outcome from using their software you will probably be right. Deception seems to be in their corporate DNA.
Re:OpenAI is a lie (Score:5, Interesting)
Just like "the cake is a lie".
There's nothing "open" about OpenAI. They are exploiting the common meaning of open software. If you assume a bad outcome from using their software you will probably be right. Deception seems to be in their corporate DNA.
It's a "non-profit" operating in America under American "non-profit" rules and laws. Deception is baked into the entire concept.
And if you think a $45K claim of revenue is questionable, just wait until next year when they'll claim $100 million in losses while filing an IPO that brags about how they may never be profitable again, as a corrupt investment pool drools about future stock gains ranting how they're worth billions.
Nothing quite like the rollercoaster ride of American profiteering that goes off the rails every decade or two.
But why are Microsoft investing in OpenAI? (Score:4, Funny)
I just doesn't figure, does it?
Re:But why are Microsoft investing in OpenAI? (Score:5, Informative)
Microsoft may still do evil stuff, but it's *different* evil stuff. To say they are attacking open source is simply no longer true.
Re: (Score:2)
Microsoft may still do evil stuff, but it's *different* evil stuff. To say they are attacking open source is simply no longer true.
"... Then they fight you. Then you win."
Re: (Score:1)
This isn't the "win" scenario. The official "win" scenario is Microsoft releasing a Linux native version of Office.
Re: (Score:2)
Re: (Score:1)
Hmm, very interesting! I would have assumed they blocked Linux for that thing.
Re: (Score:1)
I just don't get why a company like Microsoft would associate itself with an open-source, not-for-profit organisation like OpenAI. I just doesn't figure, does it?
Kind of sounds a lot like Bill Gates the farm land magnate, now doesn't it?
Perhaps we peer into the future farther than the next fiscal quarter to find the reasons billionaires and mega-corps just might know an outcome they're helping create. No one ever said the mega-rich got that way operating within reasonable moral and fiscal boundaries.
Note that the Americanized version of "non-profit" tax law, is FAR from what most assume.
Re:But why are Microsoft investing in OpenAI? (Score:4, Funny)
Re: (Score:2)
I just don't get why a company like Microsoft would associate itself with an open-source, not-for-profit organisation like OpenAI.
I just doesn't figure, does it?
a) They didn't invest money they invested Azure credits, which still costs them, but it gives them a huge and high profile Azure ML client.
b) MS is a lot less anti-open-source than they used to be.
c) AFAIK their investment is in the capped for-profit arm. I don't know exactly how the 100x profit rule works (you stop getting dividends at a certain point?) but I don't think they own any of the non-profit.
Re: (Score:2)
OpenAI is NOT open source and is FOR profit.
FFS, Slashdot.
fundamentally (Score:1)
"...you can't really get a holistic sense of these organizations when you don't have consolidated financial statements."
Maybe Thad is starting to catch on?
Safety Arm (Score:2)
"Our nonprofit side is the AI Safety arm".
"Our nonprofit arm does no fundraising and has no expenses."
"The CEO is a danger to Humanity and you need to fire him."
"Our superstar CEO? There's no way we could do ... oh ... wow ... really?"
(scenes from a bad nascent-dystopia novel)
Won't exist in a few years, maybe sooner (Score:2)