Microsoft Ends Free M365 Business Premium Licenses for Non-Profits

In a significant shift, Microsoft has announced the discontinuation of free licenses for its Microsoft 365 Business Premium and Office 365 E1 products for non-profit organizations (NPOs) effective July 1, 2025. This decision marks the end of a long-standing initiative where NPOs could access these services at no cost.

The tech giant stated that the change aims to streamline its subsidized offerings and simplify its portfolio for non-profits. As a result of this transition, organizations that previously relied on free licenses will now need to consider paid alternatives. Notably, Microsoft is offering the M365 Business Basic package as an alternative to the Premium tier.

However, this shift comes with notable limitations. Under the new Business Basic plan, non-profits will no longer have access to the desktop versions of Office applications; instead, these programs will only be available as web and mobile applications. Additionally, key management tools such as Intune and Entra ID, as well as security features like Microsoft Defender and Purview, will not be included in the basic package. Still, essential services like MS Teams, Outlook, SharePoint, and one terabyte of cloud storage per user in OneDrive will remain available.

For non-profit organizations needing more than 300 licenses or those that utilize features from the Premium package, a transition to paid plans is unavoidable. Microsoft has indicated that while it will provide discounts of up to 75% on other M365 packages, the Premium service will incur a monthly fee of $6.60 per user. Alternatively, the M365 Business Standard package, which includes desktop applications but excludes Intune and Entra ID, will cost $3.75 per user each month, or $5.50 for annual payments, translating to $3.13 per month.

This change comes on the heels of Microsoft's recent efforts to encourage its enterprise customers to migrate from perpetual licenses to subscription-based models. The company promoted the benefits of its Microsoft 365 subscription, highlighting features such as access to the Teams video conferencing tool and the AI-powered Copilot, which is now available to private users as of January 2025. Additionally, Microsoft has increased subscription fees by 30% as part of this transition.

As Microsoft implements these changes, non-profit organizations will need to reassess their financial strategies and technology needs, navigating a landscape where access to essential tools will require budgeting for new expenses.