02 Jul Microsoft licensing changes for nonprofits, explained
On May 14, 2025, Microsoft sent an email to non-profit grant customers announcing: Your Microsoft 365 Business Premium grant is being discontinued. Such words can send shivers up the spines of non-profit staff, as many depend on the Microsoft grants.
First, if you’re still shivering, that’s understandable — but please wrap yourself in a warm blanket before you keep reading.
Second, while this change will impact many nonprofits, there is no need to panic. We are here to help.
The Microsoft announcement stated that effective July 1, 2025, or at your next renewal, the current grant for 10 free Microsoft 365 Business Premium licenses will be discontinued.
That means if you want to continue using this license, you will need to pay for it. The non-profit price is $5.50 per user per month ($66 per year). You are required to pay for this annually per user.
If your nonprofit is using all 10 of the free licenses, your cost to keep what you’ve got will now be $660 per year.
While using the 10 free was easy, if you’re not using all the features of Business Premium, there are ways to save.
Breaking down the basics
Microsoft’s current grant licensing — while providing value — was a bit confusing; nonprofits got the bottom and top licensing level free, while having to pay for the middle. While not as good a value for nonprofits, the new approach simplifies licensing to give nonprofits the basic level free, and charging discounted rates for the middle and top levels.
Under the new grant, nonprofits will still receive up to 300 free Microsoft 365 Business Basic licenses. The key to this license is that it does NOT provide any of the desktop apps. You can still use these apps, but only in a browser.
If you need the desktop apps, you will need to use the Business Standard license, which is $3 per user per month, or $36 per year. If the only reason you are using the Business Premium license is for the desktop apps, then you could keep what you have now for $360 per year instead of $660 for the 10 licenses that used to be free.
While free, the 10 Business Premium licenses offered a lot of features many nonprofits were not using anyway. For maximum savings, we have always recommended that you only license what features you need beyond the grant. Not every user needs to have the same license; so, now that those 10 free Business Premium licenses are no longer free, it would be wise to evaluate who has what license, and why.
The worst-case/best-case scenarios
If you are using the features in the Business Premium license for 10 users, those would now cost an additional $660 per year.
Conversely, the best-case scenario would be paying $360 per year if those 10 users don’t need the advanced features of Business Premium.
A quick note on strategy
I’ve seen many users discussing jumping ship and leaving Microsoft for Google Workspace or Open Office. It’s understandable; depending on your organization, $360 or $660 per year might be a significant consideration. However, that’s inexpensive in comparison to making a hasty decision to change platforms.
It’s important to fully evaluate the differences between these platforms because they are not the same.
Nonprofits have enjoyed generous use of these platforms for decades. As these grants change, I encourage your ministry to be strategic, not reactionary. Today it’s Microsoft; tomorrow it might be Google.
It’s also important to remember that Google restricts those who can use their free software through a clause in their non-profit agreement regarding employment discrimination which some churches and ministries might find disagreeable.
I encourage you to be thankful for what God has provided — and strategic as you move forward. Licensing needs are unique, and MBS is here to help you prepare for your next renewal.
Original content by the MBS, Inc.. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.