The Microsoft nonprofit grant program has just given ~400k nonprofits a 45-day notice about a cornerstone tech support for the sector for approximately 12 years (launching in 2013).
Microsoft’s decision to discontinue the Microsoft 365 Business Premium and Office 365 E1 nonprofit grant programs represents a significant shift that disproportionately affects small and mid-sized nonprofits in ways that may not be immediately obvious.
“This isn’t just a Microsoft 365 grant cancellation—this is a Microsoft 180 on a foundational tech grant with barely two months’ notice on a +10yr old grant. That’s not a transition; it’s a rug pull. While a surprise budget shortfall might be a rounding error to a trillion-dollar tech giant, for small nonprofits operating under $500,000 annually, it’s devastating. Every dollar is already committed to communities in need.”
-George Weiner
Chief Whaler, Whole Whale
What is changing about the Microsoft grant?
Discontinued Free Licenses:
Summary of grants changes announced by Microsoft May, 2025.
- Microsoft 365 Business Premium donation (previously 10 free seats)
- Office 365 E1 donation (previously available for free via standard channels)
- Effective Date: Microsoft announced that the free grants for Microsoft 365 Business Premium and Office 365 E1 will be discontinued starting July 1, 2025.
Impact on Renewals:
- If your organization’s license renewal date is on or after July 1, 2025, the free grant licenses will no longer be available upon renewal.
- So, if your renewal is scheduled for July 2, 2025, you will need to transition to alternative licensing options at that time.
Tl;dr Goodbye free Desktop Apps, Security, and Webinar hosting
Reduced Productivity:
- Desktop applications offer robust functionality that web versions simply cannot match, particularly for complex documents, data analysis, and presentations
- Nonprofit staff frequently create detailed grant proposals, financial reports, and program evaluations that require advanced formatting, tracking changes, and specialized Excel functions
Offline Access Necessity:
- Many nonprofits operate in environments with unreliable internet access:
- Rural service providers
- International development organizations
- Disaster response teams
- Community outreach workers in underserved areas
- The ability to work offline isn’t a convenience—it’s essential for uninterrupted service delivery
Why this matters for Small Nonprofits?
For a 20-person nonprofit, the new annual cost of approximately $1,320 for Microsoft 365 Business Premium licenses might seem modest when viewed through a corporate lens. However, this perspective misses crucial context:
- Budget Constraints: Many small nonprofits operate with annual budgets under $500,000, with some as low as $50,000-$100,000. Adding $1,320 in unexpected technology costs represents 1-2% of their entire operating budget.
- Zero-Sum Budgeting: Unlike businesses that can adjust pricing or seek additional revenue, nonprofits typically operate on fixed grants and donations. Every dollar spent on technology is a dollar not spent on direct services to constituents.
- Staffing Implications: For organizations where staff salaries are the largest expense, $1,320 represents roughly 2-3% of an entry-level position’s salary. These changes effectively force a choice between technology and human resources.
More context & math
- 400k nonprofits have 45 days to figure out how to replate local apps and security
- 4 million nonprofit employees impacted (10 licenses per nonprofit * 400k)
- Microsoft is the world’s largest company
- 45 days was given as notice, yes there are rolling cancellations based on renewal date but that still means (400k/12=33k) 33k nonprofits need to figure this out in July
- Nonprofits are facing unprecedented funding stress due to DOGE cuts
- If Microsoft sets the standard for nickel and diming nonprofits others will follow
- The marginal cost of a Office 365 license is less than a Compact Disc
- The most MSFT will potentially make is ~$264m which is .078% of their Market Cap
Transition Options
Upon the expiration of the grant licenses, nonprofits have several options:
- Microsoft 365 Business Basic:
- Cost: Free for up to 300 users.
- Features: Includes web and mobile versions of Office apps, email hosting, 1 TB of OneDrive storage per user, Teams, and SharePoint.
- Limitations: Does not include desktop versions of Office apps or advanced security features.Reddit+2Cobweb+2Tech Impact+2Cobweb+2MicroWarehouse+2Tech Impact+2
- Microsoft 365 Business Premium:
- Cost: Discounted nonprofit rate of approximately $5.50 per user per month.
- Features: Includes full desktop versions of Office apps, advanced security features, and device management tools.Cobweb+1Tech Impact+1
- Office 365 E1 via Enterprise Agreement:
- Availability: Eligible nonprofits can obtain up to 2,000 free E1 licenses through an Enterprise Agreement with Microsoft.Cobweb+1Smartdesc+1
2. Google For Nonprofit Suite
Hello, Google my old friend, I’ve come to talk with you again.
- Google Workspace for nonprofits – free for nonprofits that need gmail, docs (cloud), calendar, Drive, Google Meet.
- These docs solutions have “offline mode” but must be synced correctly.
Free/open source alternatives to Microsoft 365 Apps for Nonprofits
LibreOffice | libreoffice.org
Whole Whale recommends this for most nonprofits given Microsoft compatibility, rich features, active support, and extensive community resources.
- Applications: Writer (Word), Calc (Excel), Impress (PowerPoint), Draw, Base (Access alternative), Math
- Key strengths:
- High compatibility with Microsoft Office file formats (DOCX, XLSX, PPTX)
- Feature-rich, actively developed, strong community support
- Fully functional offline
OnlyOffice Desktop Editors | onlyoffice.com
- Applications: Document Editor, Spreadsheet Editor, Presentation Editor
- Key strengths:
- Excellent compatibility with Office file formats
- Modern, intuitive interface similar to Microsoft Office
- Collaborative editing (with an OnlyOffice cloud or private server)
- Good integration capabilities
Apache OpenOffice | openoffice.org
- Applications: Writer, Calc, Impress, Draw, Base, Math
- Key strengths:
- Long-standing, stable office suite (foundation for LibreOffice)
- Good compatibility and reliable offline performance
- Simple and straightforward user experience, lower resource usage
What do you think about this change?
Whole Whale believes that a more graceful grant deprecation would look like this:
1 Year Notice and time to transition or budget for the change
Nonprofits under $1 Million in revenuecontinue to get the existing granted software
Here is what nonprofits that are impacted think.