Ellen P. Aprill (Loyola L.A.) has posted Is OpenAI Foundation a Private Foundation? Should It Be? Here is the abstract:
The saga leading to the recapitalization of OpenAI into a nonprofit now named OpenAI Foundation and a public benefit corporation named OpenAI Group PBC has attracted a great deal of attention from the public, the media, and the Attorneys General of both California and Delaware. After this recapitalization, some commentary suggested that OpenAI Foundation was now characterized as a private foundation under the Internal Revenue Code. If so, it would be subject to the many burdensome rules private foundations endure.
This piece explains how and why OpenAI Foundation continues to qualify as what is called a public charity and not a private foundation. In examining this issue, the piece details not only the test on which OpenAI Foundation relies but also developments, including the movement to investing for total return, that might call for changes to it. To make clear the impact on OpenAI Foundation of characterization as a private foundation, it also sets out the consequences for OpenAI Foundation of the various private foundation excise taxes if it is treated as a private foundation and contrasts the regime applicable to public charities.
The piece closes with suggestions for changes to several current rules discussed in the paper, in particular rules relating to donations from donor-advised funds, and of issues needing further study, such as the extent to which public charities rely on capital gain for operating revenue. This examination enhances understanding of private foundations, public charities, and public benefit corporations.