Apr 9, 2025
Let’s start with the headline: OpenAI is now a Public Benefit Corporation (PBC).
Yes, that non-profit OpenAI—the company behind ChatGPT, DALL·E, and the technology reshaping everything from customer service to corporate strategy.
Initially, funding was secured through a combination of cash donations and contributions from major tech companies. However, the growing computational demands of scaling AI research quickly surpassed what could be maintained through donations alone. To address this challenge and continue their mission, they explored various strategies and ultimately decided to convert to a PBC.
When a company that influential changes its legal structure to lock in both profit and purpose, the business world pays attention. As it should.
The buzz around Public Benefit Corporations (PBCs) is getting louder—LinkedIn threads, legal think pieces, maybe even your group chat. And we love to see it.
Because here’s a little secret: this isn’t a thought exercise for us. At Unified Law Group, PB LLC, the “PB” isn’t just a suffix—it’s a promise. We’re a Delaware Public Benefit Corporation ourselves. Being a PBC isn’t something we recommend from the sidelines. It’s how we do business every day.
But this isn’t about us. It’s about you—the founder or funder who wants to build something ambitious and lasting without compromising your values...
🔍 A Public Benefit Corporation is a for-profit business that legally commits to both generating profits and creating a positive impact on society or the environment.
So let’s talk about what a PBC actually is, why OpenAI’s move matters (a lot), and how this structure might just be the smartest way to scale with both integrity and intention.
What Exactly Is a Public Benefit Corporation?
Let’s get the basics out of the way. A Public Benefit Corporation is a for-profit company that also commits to a specific public benefit—something beyond maximizing shareholder returns. It’s a legally recognized corporate structure in Delaware (and other states), governed by specific provisions in the Delaware General Corporation Law (DGCL §§ 361–368).
PBCs are not nonprofits. Just like traditional C-corps, PBCs make money, scale, raise capital, issue equity, and go public.
The key difference? PBCs are legally required to balance three interests:
The financial interests of shareholders,
The public benefit identified in the charter, and
The best interests of stakeholders, such as employees, customers, suppliers, and communities.
In traditional corporations, directors are expected to put shareholder profits above all else. In PBCs, directors must consider broader impacts and are protected when they prioritize mission alongside money.
Why Did OpenAI Become a PBC?
OpenAI needs capital. Developing Artificial General Intelligence (AGI) requires billions of dollars. But OpenAI’s mission is to ensure AGI benefits all of humanity, and founder Sam Altman didn’t want that mission diluted by pressure from short-term investors or investors who don’t share OpenAI’s mission.
So they converted to a Public Benefit Corporation.
This move lets OpenAI:
Raise capital (check),
Stay mission-aligned (check), and
Filter for long-term investors who believe in the vision (triple check).
It’s a power move. It says, “We’re not just here to grow fast—we’re here to grow right.” If you’re a mission-first founder navigating term sheets, you should be paying close attention.
Real Talk: What the Law Actually Says about PBCs
We dove into the Practical Law guidance on Delaware PBCs, and here are the highlights founders need to know:
1. Balancing is the Name of the Game
Directors must balance:
Shareholder value,
The company’s specific public benefit (e.g., “ethical AI,” “climate justice,” “democratized education”) identified in the charter, and
The best interests of those materially affected by the company’s conduct.
This isn’t loosey-goosey ESG fluff. It’s written into the DGCL. And directors are legally protected under the business judgment rule if their balancing decisions are rational, disinterested, and informed.
2. You Must Report
PBCs must issue a biennial report to shareholders assessing how the company is pursuing its public benefit. Want to publish it publicly or seek third-party verification? You can—and many do—but it’s not required unless you say so in your governing documents.
3. Notice Is Mandatory
If you’re a PBC, your certificate of incorporation must say so, and your stock certificates must too. You also have to notify investors upon issuance or transfer of uncertificated stocks.
4. You Can Convert Later
You don’t have to start as a PBC. A traditional C-corp can convert to a PBC with majority shareholder approval. (Pro tip: get your investors on board early—this is a values conversation, not a surprise.)
Debunking the Biggest Myths About PBCs
Let’s clear the air. There’s a lot of misinformation about PBCs out there. Here are the top four myths we hear—followed by the real deal.
❌ Myth #1: PBCs Can’t Make Money
This one dies hard. People assume that if you care about the planet (or any other social cause), your profits must suffer. But OpenAI is worth $80+ billion. Patagonia is a PBC. Warby Parker. Lemonade. Cotopaxi. Laureate Education. They’re not playing small-ball.
✅ Truth: PBCs are for-profit enterprises. The structure doesn’t limit your financial upside—it protects your mission as you scale.
❌ Myth #2: Investors Don’t Like PBCs
We’ve heard this from nervous founders, especially early-stage. “What if VCs don’t bite?”
✅ Truth: The right ones will. In fact, PBCs are a great way to weed out short-term thinkers who don’t align with your long-term goals. If a potential investor flinches at your structure, you’ve just saved yourself a toxic board seat. PBCs can even access the public markets – see Laureate Education, Lemonade, and Vital Farms.
❌ Myth #3: It’s Just a PR Move
This one’s rich. A PR move you can get sued over? Please.
✅ Truth: Directors can be held accountable by shareholders (if they meet the 2% or $2 million threshold). The law has teeth—and the balancing obligations are real. But directors are also protected when they make rational, good-faith decisions that honor the three-part mission.
❌ Myth #4: Founders Lose Control
This one scares people off unnecessarily.
✅ Truth: The PBC structure doesn’t remove control. It embeds mission into your governance, so you don’t have to argue about values every time you raise money, go to market, or make a tough board decision. It protects your legacy, not erases it.
What Does Balancing Really Look Like?
Okay, now let’s make this real. What does it actually mean for a board to weigh shareholder value, public benefit, and stakeholder impact?
Here are a few real-world hypotheticals:
1. Data Privacy vs. Revenue Growth
A startup building AI-powered analytics is offered a lucrative deal to sell anonymized user data to a third-party advertiser. The shareholders are interested—it’s a one-time cash injection they didn’t expect. But the company’s public benefit is “promoting ethical AI and protecting user privacy.”
Cue the dilemma.
Sure, the deal boosts revenue. But only once, and it erodes trust with users and contradicts the company’s mission. Plus, with state privacy laws like Texas’ CUBI and California’s CPRA tightening the screws, there’s real regulatory risk.
The PBC response?
The board declines the deal and doubles down on privacy features that differentiate their product and reinforce customer loyalty. It’s not just ethically sound—it’s smart positioning.
2. Layoffs vs. Long-Term Sustainability
A U.S.-based startup in the sustainable beauty space hits a cash flow wall. The lead investor demands layoffs—“Cut now, rehire later.” It makes the short-term numbers work. But the public benefit? Expanding access to refillable, zero-waste products.
Laying off mission-driven employees could tank morale and damage the brand. Worse, these aren’t easy-to-replace roles in a niche industry.
The PBC response?
Leadership explores alternative cost-cutting: delaying product launches, trimming executive pay, and pausing marketing spend. The team stays intact, and when demand rebounds next quarter, they’re ready.
3. Packaging vs. Planet: A DTC Brand’s Fork in the Road
A consumer goods company committed to reducing plastic waste finds a cheaper supplier that uses non-recyclable materials. Switching could boost margins by 12%. The CFO pushes hard. But switching contradicts the company’s public benefit to reduce single-use plastic in e-commerce.
The PBC response?
Rather than switch, they renegotiate contracts and crowdsource sustainable packaging ideas from customers. The PR buzz alone offsets the cost—and deepens loyalty with their customer base.
Sometimes, mission decisions create their own upside.
Why Unified Law Chose the PBC Model
We’re a Public Benefit Corporation ourselves. Why? Because we believe in practicing what we preach. Our mission—to make high-quality legal, tax, audit, and accounting support accessible to growing businesses and social enterprises—is in our charter. We live it. We report on it. We hire and price accordingly.
And our clients? They’re startups, funds, and founders – many who want to win big without selling out. PBCs are a way to scale smart, align your board, and attract the right capital—all while staying true to your “why.”
And just to be clear—we love all our clients, not just the PBCs, non-profits, and social enterprises. Some of our favorite work is helping growth-minded businesses make more money, move faster, and still sleep well at night. Without those clients, we wouldn’t be able to offer the Unified for UN discount to nonprofits and social enterprises. So go ahead—scale up, go global, and keep doing good in your own way. We’re here for all of it.
Thinking About Becoming a PBC? Start Here.
Whether you're just incorporating or years into growth, the PBC model might be right for you. Here’s a quick checklist to guide your thinking:
✅ Step 1: Clarify Your Public Benefit
Make it specific, but broad enough to grow with you. Don’t say “do good.” Say “expand access to clean water” or “support ethical AI research.”
✅ Step 2: Amend or Draft Your Charter
For conversions, you’ll need a shareholder vote. Get buy-in from your investors. For new business formations, it’s easy to bake it in from Day 1.
✅ Step 3: Build Your First Impact Framework
Decide what impact is and how you will measure it. What metrics will you track? Who’s responsible? What does success look like beyond the financials?
✅ Step 4: Educate Your Team
Make sure your board, execs, and investors understand the structure and their role in supporting it. It’s a competitive advantage—if it’s understood.
✅ Step 5: Call Us
Seriously. We’ve done this before. We know the red flags, the negotiation landmines, and the opportunities others miss.
Final Word: OpenAI Just Drew the Roadmap—But You Get to Choose the Vehicle
OpenAI didn’t become a Public Benefit Corporation to win style points. They did it to scale with integrity, keep their mission front and center, and set a foundation that can withstand the pressure of short-term thinking, headlines, and the pace of innovation.
That’s not trivial. That’s strategy.
While OpenAI may be the shiny example of the moment, the truth is that the PBC model isn’t reserved for the billion-dollar club. It’s built for founders of all shapes and stages—the scrappy teams, the mission-driven dreamers, and the operators who care about financial results and social outcomes.
At Unified Law Group, PB LLC, we’ve seen how powerful it is when a company ties its growth to its values. We didn’t choose the PBC model to pay lip service to a public benefit—it’s ingrained in our business decisions. And we’re here to help you do the same, with fewer landmines and more clarity.
Whether you're forming your company or you’re already years into your journey, the PBC structure isn’t a detour from growth—it’s your best route to sustainable, mission-protecting, investor-welcoming, long-term success.
So, if your gut says, “We want to build something that lasts, something that means something”— We do too! Join us. We’ll back you all the way.
Ready to explore the PBC path? Let’s talk.
