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I am not familiar with the US law, but I don't really understand how is the whole "start as a nonprofit, become a for profit once your product turns out to be p
by entropi 2y ago
I am not familiar with the US law, but I don't really understand how is the whole "start as a nonprofit, become a for profit once your product turns out to be profitable" thing legal. It looks like a complete scam to me. And while I don't like Elon at all, I think he and other earlier donors have a very strong case here.
- throwup238 2y agoDon’t worry, 99.999% of the people here don’t know the first thing about how non profits work. The for profit arm is legally mandated by the IRS, full stop. Nonprofits can’t just start a business and declare all the revenue tax free. Any “unrelated business income” must go through a tax paying entity. ChatGPT and the API are unrelated businesses and OpenAI has had this non/for profit split since 2019. See for example the Mozilla Foundation. It owns the Mozilla Corporation which is paid by Google for default search engine placement and it pays the engineers working on the browser full time. The difference here is that the OpenAI forprofit is issuing shares to external shareholders in exchange for investment (just like any other company), while Mozilla keeps the corporation in its entirety.