Microsoft retired its free Microsoft 365 Business Premium and Office 365 E1 grants for charities in July 2025. If your organisation previously relied on those licences, your next renewal will likely involve choosing between discounted Microsoft 365 licences rather than continuing with free grants. For many charities, the key decision is whether Microsoft 365 Business Basic is sufficient, or whether some users still need Business Premium.

The right answer depends on how your organisation works, the security controls you require and which Microsoft features your teams actually use. Before your next renewal, it’s worth understanding what changed, what licensing options remain available and how to avoid paying for licences you don’t need—or removing capabilities you do.

What Changed to Microsoft’s Nonprofit Licences in 2025?

For many years, eligible non-profits could access free Microsoft 365 Business Premium and Office 365 E1 licences through Microsoft’s nonprofit programme.

These grants enabled charities to benefit from productivity, collaboration and security tools without the full commercial cost of licensing. As a result, many organisations built their Microsoft environment around the licences available through the programme.

In July 2025, Microsoft retired those free grants.

While Microsoft’s commitment to supporting non-profits remains in place, organisations that previously relied on free Business Premium or Office 365 E1 licences now need to evaluate alternative licensing options and budget accordingly. Eligible organisations can still access Microsoft’s nonprofit programme and associated discounts.

For some charities, the financial impact has been relatively modest. For others, particularly those with larger user bases, the change has prompted a more fundamental review of their Microsoft estate.

What Microsoft Charity Discounts Are Available Now?

The retirement of the grants did not bring an end to Microsoft’s nonprofit programme.

Eligible charities can still access discounted Microsoft licences through the nonprofit scheme. However, instead of relying on free allocations of Business Premium or Office 365 E1, organisations now need to determine which licences offer the best balance of functionality, security and cost.

This has shifted the conversation from “What licences do we get?” to “What licences do we actually need?”

That distinction matters.

The most cost-effective licensing strategy is rarely the one that simply selects the cheapest option available. It’s the one that gives users the capabilities they need without paying for functionality that delivers little value.

For many charities, the key decision at renewal is whether Microsoft 365 Business Basic provides enough functionality, or whether some users should remain on higher-tier licences. Understanding how your teams use Microsoft 365 today is often more important than focusing solely on licence costs.

Should Charities Move to Microsoft 365 Business Basic?

Following the Microsoft for not for profit grant changes, many organisations have naturally looked at Microsoft 365 Business Basic as a replacement option.
Business Basic includes the core tools most charities rely on every day:
  • Professional email
  • Microsoft Teams
  • SharePoint
  • OneDrive
  • Web-based Office applications

For charities whose staff spend most of their time communicating, collaborating and sharing documents online, this may appear to be a sensible alternative.

In some cases, it is.

But before moving everyone onto Business Basic, it’s worth taking a closer look at how people actually work.

Three Signs Business Basic Is Probably Enough

Business Basic is often a good fit when users primarily need communication and collaboration tools.

You may find Business Basic is sufficient if:

1. Your Staff Mainly Work in Email, Teams and Shared Documents

If day-to-day activity revolves around meetings, document sharing and communication, Business Basic may provide everything required. For example, volunteer coordinators, programme staff and occasional users often fall into this category.

2. You Have Already Adopted Cloud-Based Working

Organisations that primarily use browser-based applications and store documents in SharePoint or OneDrive may find there is little need for more advanced licensing. The transition is often easiest when staff have already embraced cloud-first ways of working.

3. Your Security Requirements Are Relatively Straightforward

Smaller charities with limited device management requirements and lower levels of complexity may be able to operate effectively with Business Basic for many users. However, this is not true for every organisation.

Three Signs You Should Think Carefully Before Downgrading

Renewal decisions become more complicated when organisations rely on capabilities that go beyond basic communication and collaboration.

Before moving users away from Business Premium, consider the following.

1. You Handle Sensitive Data

Many charities process sensitive information relating to beneficiaries, supporters, employees or volunteers.
Where stronger security controls are an important part of your operating model, licence selection deserves careful consideration.

2. You Support Hybrid or Remote Working

Managing devices, protecting data and maintaining security standards can become more challenging as organisations adopt flexible working practices. What appears to be a cost-saving decision today may create additional operational challenges later.

3. Different Teams Have Different Needs

A finance manager, fundraiser and volunteer coordinator may all use Microsoft 365 differently. Assigning the same licence to every user can sometimes result in unnecessary costs for some teams and capability gaps for others.

Why Does a Mixed Licensing Model Often Deliver Better Value?

One of the most effective responses to Microsoft’s nonprofit licence changes is to stop thinking about licensing as a single organisation-wide decision.

Many charities benefit from matching licences to user needs.

For example:

  • Volunteers and occasional users may only require Business Basic.
  • Operational teams may benefit from additional functionality.
  • Leadership, finance and fundraising teams may require more advanced capabilities.
This approach often provides a better balance between affordability and functionality than selecting a single licence for every user.
It also creates flexibility as the organisation evolves.

What Should Your Charity Do Before Renewal?

Rather than making decisions based solely on cost, use your renewal as an opportunity to assess how Microsoft 365 supports your organisation.

A practical review should include:

1. Audit Your Existing Licences

Understand who has which licences and whether they are being used effectively.

2. Identify Critical Features

Determine which Microsoft capabilities your teams genuinely rely upon.

3. Review User Groups

Not every employee, volunteer or trustee has the same requirements.

4. Consider Security Alongside Cost

Licensing decisions should support both operational efficiency and risk management.

5. Plan Beyond This Year’s Renewal

Think about future growth, changing ways of working and evolving security expectations. The goal is not simply to reduce spend. It’s to ensure your licensing strategy remains sustainable and fit for purpose.

Practical Takeaways

Before your next Microsoft renewal:
  • Review which users were affected by the July 2025 grant changes.
  • Assess whether Business Basic genuinely meets each team’s needs.
  • Avoid assuming every user requires the same licence.
  • Consider security and governance requirements alongside budget pressures.
  • Use renewal as an opportunity to optimise rather than simply replace existing licences.

What to Consider Next

The retirement of Microsoft’s free Business Premium and Office 365 E1 grants has made licence reviews more important than ever.

Good practice looks like understanding how your organisation works, identifying the capabilities different teams need and selecting licences accordingly. For some charities, Business Basic will be sufficient for most users. For others, a combination of licence types will provide better value and stronger long-term outcomes.

If you’re approaching renewal and are unsure which licences are right for your organisation, start with a structured review of your current Microsoft environment. Understanding what you use today is the best foundation for making informed decisions about tomorrow.

ForGood.Tech works exclusively with non-profits and offers a free Microsoft licensing review to help charities understand the impact of Microsoft’s nonprofit licence changes, evaluate renewal options and optimise licensing costs.

References

https://www.microsoft.com/nonprofits
https://www.microsoft.com/microsoft-365/nonprofit
https://www.microsoft.com/nonprofits/offers-for-nonprofits

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Frequently Asked Questions About Microsoft's Nonprofit Licence Changes

What changed in Microsoft's nonprofit programme in July 2025?

A.

Microsoft retired the free Microsoft 365 Business Premium and Office 365 E1 grants for eligible non-profits. Charities can still access Microsoft’s nonprofit programme and discounted licensing offers, but organisations that previously relied on these free grants may now need to pay for licences that were previously provided at no cost.

Does Microsoft still offer discounts for charities?

A.

Yes. Microsoft continues to provide discounted licensing and other benefits through its nonprofit programme for eligible organisations. However, the specific grants that previously provided free Business Premium and Office 365 E1 licences were retired in July 2025.

What is the difference between Microsoft 365 Business Basic and Business Premium?

A.

Business Basic provides core productivity and collaboration tools, including email, Teams, SharePoint and OneDrive. Business Premium includes additional capabilities designed to help organisations manage devices, strengthen security and support more advanced administration requirements. The right choice depends on your charity’s operational and security needs.

Should our charity move everyone to Business Basic?

A.

Not necessarily. While Business Basic may be suitable for some users, many charities find that different teams have different requirements. Finance, fundraising and leadership teams may benefit from capabilities that are not included in lower-tier licences. Reviewing user needs before renewal is usually the best approach.

How do we know which Microsoft licences our staff actually need?

A.

Start by reviewing how people use Microsoft 365 today. Consider which applications they rely on, how they access organisational data, and whether they need additional security or management features. Many organisations discover that a mixed licensing approach provides better value than assigning the same licence to every user.