Bearer-Friend & Wu, The People’s AI: NGO Accountability Lessons from the OpenAI Board Scandal

In the United States, a fundamental axiom of the law of nonprofit organizations is that nonprofits do not have owners. The practical scope of this limitation was very publicly tested, however, by the high-profile developments of the artificial intelligence nonprofit, OpenAI, when the board of the organization voted to fire its chief executive. This decision was swiftly overturned due to agitation by investors in the charity’s joint venture. Microsoft, one of the three largest companies in the world as measured by market capitalization, is the primary investor in OpenAI’s joint venture.

This article uses the controversy surrounding the governance of OpenAI as a launching point for evaluating the potential role of owners in regulating nonprofits. In a world where nonprofits do functionally have owners, as appeared to be the case in OpenAI, this article asks whether it is desirable for the public to be a fractional owner in nonprofits. This is a novel research question since the framework of ownership presents a form of accountability that is generally viewed as outside the scope for nonprofits. This article explores the feasibility and implications of establishing the new accountability device of fractional public ownership in nonprofits, giving control rights while preserving the nondistribution constraint required of the sector. This research also has implications far beyond the United States, since fractional public ownership of NGOs could be a regulatory device available in all jurisdictions that allow for the incorporation and regulation of NGOs.