Microsoft licensing for nonprofits in 2026.

Microsoft’s nonprofit program looks different than it did two years ago. The most generous grants are gone, the free tier is narrower, and almost everything above it is now a discount rather than a donation. That is not bad news for most organizations, but it does mean the license mix you set up in 2023 is probably costing you more than it needs to, or covering fewer people than you think.

This guide lays out the current picture for a US nonprofit, with prices as Microsoft publishes them. Prices are in US dollars, per user per month, on an annual commitment, and Microsoft notes they are for information only and can change. If a figure matters to a budget decision, confirm it at purchase.

What changed on July 1, 2025.

Microsoft discontinued two grants that many nonprofits were built on: the Microsoft 365 Business Premium grant and the Office 365 E1 grant. Neither was cut off on the day. Existing grant licenses expire at the organization’s next renewal date and do not renew, which is why some nonprofits only felt the change in 2026.

Microsoft does not move users for you. Replacing the licenses is a manual step in the Microsoft 365 admin center: buy the new subscription, reassign users, then cancel the old one. Microsoft’s guidance is to finish that before the old subscription ends, so users do not lose service or data. Organizations with more than 300 active users on the old E1 grant can ask Microsoft to review their options.

What is still free.

• Microsoft 365 Business Basic, granted free for up to 300 users. It includes the web and mobile versions of Word, Excel, PowerPoint, and Outlook, Teams, custom-domain email, and 1 TB of cloud storage per user. It does not include the desktop apps.
• Microsoft Copilot Chat, the web-grounded AI chat, at no extra cost for anyone signed in with a work account on an eligible plan, Business Basic included. More on this below.
• Azure credits of $2,000 a year for eligible nonprofits, for workloads such as websites, virtual machines, databases, and AI services.
• Power Apps for up to 10 users.
• Microsoft AccountGuard, which adds nation-state threat notifications, plus a free security assessment through Microsoft’s Security Program for Nonprofits.

Granted licenses come with a usage expectation. Microsoft lists “failing to remove unused grant licenses” as program abuse and sets the bar at 85% active usage of granted licenses. A tenant holding 300 free seats for 120 staff is out of policy.

What is discounted, and by how much.

Above Business Basic, Microsoft sells nonprofit-priced versions of its main plans. These are the published US prices.

Two details shape the choice. First, the Business plans are built for organizations of 1 to 300 users; above that, the E3 and E5 plans are the nonprofit path. Second, Business Premium is the plan that adds device management, advanced threat protection, and sensitive-data protection to the desktop apps, which is why it costs more than Business Standard and why it is the usual answer for staff who handle donor, client, or patient data. For the full comparison, see Business Premium vs E3 for nonprofits.

Office 365 E1 still exists at nonprofit pricing; only the free grant ended. And organizations on E3 or E5 get a volunteer use benefit: for each licensed E3 or E5 seat, up to five additional Microsoft 365 F3 seats for volunteers.

Microsoft Copilot and Copilot Chat.

Microsoft Copilot Chat (formerly Microsoft 365 Copilot Chat) is included at no extra cost for users who sign in with a work account and hold a qualifying Microsoft 365 plan, from Business Basic through E5. It answers from the web, drafts, and analyzes files a user uploads, under Microsoft’s enterprise data protection terms. Agents that reach into shared organizational data, such as SharePoint, are billed on metered consumption (Copilot Credits), and Microsoft notes an Azure subscription is required for them.

Microsoft Copilot (formerly Microsoft 365 Copilot) is the paid add-on that works inside Word, Excel, Outlook, and Teams and reasons over your organization’s own data. For eligible nonprofits, Microsoft publishes a 15% discount: $25.50 per user per month, paid yearly. It requires a qualifying Microsoft 365 plan underneath it.

There is a time-limited angle too. Through December 31, 2026, Microsoft lets eligible nonprofits combine additional partner promotions, listed at 15%, 20%, 30%, and 40%, on top of the nonprofit Copilot price, where before it was one or the other. Eligibility and terms vary by promotion, so a partner has to confirm which applies before you buy.

Security add-ons: Defender and Purview.

For Business Premium tenants, Microsoft offers three add-ons at nonprofit pricing, each at a published 60% discount for eligible nonprofits:

• Microsoft Defender Suite for Microsoft 365 Business Premium, which adds Microsoft Entra ID P2, Defender for Identity, Defender for Endpoint Plan 2, Defender for Office 365 Plan 2, and Defender for Cloud Apps.
• Microsoft Purview Suite for Microsoft 365 Business Premium, for discovering, protecting, and monitoring sensitive information.
• Microsoft Defender and Purview Suites for Microsoft 365 Business Premium, the two together.

These are per-user add-ons, so they do not have to cover everyone. They make the most sense for the people who hold the keys: finance, executives, IT administrators, and staff with access to sensitive records.

Azure, Dynamics 365, and Power Platform.

Azure. Eligible nonprofits receive $2,000 in Azure credits each year. The grant was $3,500 until renewals on or after October 1, 2023, so older budgets may overstate it.

Dynamics 365. Discounted, not granted. Microsoft publishes nonprofit prices of $32.00 per user per month for Dynamics 365 Business Central, and $23.80 each for Dynamics 365 Sales Enterprise and Dynamics 365 Service Enterprise. The old Sales Enterprise grant ended on October 1, 2023.

Power Platform. Power Apps is free for up to 10 users, then $2.50 per user per month. Power Automate Premium is $3.75 per user per month, paid yearly.

Who is eligible, and how validation works.

In the United States, Microsoft’s program covers:

• Nonprofits with recognized legal status, equivalent to 501(c)(3).
• Public libraries and public museums.
• Specific US healthcare organizations: independent critical access hospitals and rural emergency hospitals (not part of a health system), HRSA-designated Federally Qualified Health Centers and Look-Alikes, CMS-certified nonprofit rural health clinics, skilled nursing facilities, and long-term care facilities.

Government agencies, schools and universities, other healthcare organizations, financial institutions, trade associations, and political, labor, and fraternal organizations are not eligible. Lobbying activity can also block validation.

Registration happens in Microsoft’s Nonprofit Hub. You provide the organization’s legal name, website, address, and legal identifier (the EIN in the US), and an independent validation partner reviews it, usually within three business days. Three rules catch organizations out:

• Someone inside the organization has to register. The registrant must be an employee or strategic volunteer; a third-party IT provider may not register on your behalf. A partner can prepare you and manage the licenses afterward as a delegated administrator. More on the two ways to buy in buying Microsoft licenses as a nonprofit.
• One validated tenant per organization. Nonprofit benefits cannot be split across tenants or moved between them without revalidating.
• Grants and discounts cover different people. Granted licenses are for paid employees and unpaid executive staff such as board members. Discounted licenses can go to all staff, including volunteers and temporary staff. Beneficiaries, donors, and members are not eligible for either.

Microsoft also asks grantees to complete a periodic attestation to keep their eligibility.

How to right-size your licenses.

Most of the savings in a nonprofit tenant come from matching each person to the least expensive license that does the job. A short checklist: