Earlier this year, Microsoft surprised nonprofits by announcing in an email to users that its grant of 10 free Microsoft 365 Business Premium licenses for nonprofits will be discontinued. Organizations will not be able to renew these free premium licenses on their first renewal date after July 1, 2025.
Microsoft has published a hub page that has more information about the transition, but a lot of it is in the form of recordings of "office hour" sessions and invalid links to FAQs. I had to dig into the process myself, including contacting Microsoft support, to understand exactly what’s required. Here’s what I learned.
Nothing Happens Automatically – Action Is Required
If your nonprofit currently has the free Business Premium licenses, you must take action before your renewal date. Any existing licenses will not automatically convert to paid licenses.
If you do nothing, the free licenses will expire, and any users assigned those licenses will be unassigned. This could cause serious issues, including potential data loss. The key is to make the changes before your renewal date to ensure a smooth transition.
Two Common Scenarios for Transition
1. Converting to Paid Business Premium Licenses
If you want to keep all of your current Business Premium licenses:
- Log in to the Microsoft 365 Admin Center.
- Purchase the same number of Business Premium licenses you currently use, at the nonprofit rate ($5.50/user/month).
- If you already have paid Premium licenses because you have more than 10 users assigned, simply add ten licenses to your current paid plan.
- Important: When you look at all your licenses in the Microsoft 365 Admin Center, you will see two entries for the Business Premium licenses – one for the free version and one for the newly purchased paid version. Even though there are separate entries, Microsoft lumps all of the licenses together. As long as you see the correct number of assigned licenses listed under the paid version, you will be fine. You shouldn't have to reassign any licenses.
- (Optional) Cancel the free version to clean up your license list.
2. Moving to Business Basic Licenses
If your organization doesn’t need all the features of Business Premium, Microsoft still offers up to 300 free Business Basic licenses for nonprofits.
- Purchase (at the free rate) as many Business Basic licenses as you need.
- Reassign users from the expiring Business Premium licenses to the new Business Basic ones.
Microsoft has a good blog post with comparisons of the Basic and Premium licenses and more information on switching between the two. I've also listed a few of the differences below.
Real-Life Example
One of our nonprofit clients has five free Business Premium licenses. In reality, only two of those users need the advanced features, the others could work just fine with Business Basic.
Before their renewal date, we will:
- Purchase two paid Business Premium licenses (nonprofit rate).
- Purchase three Business Basic licenses (free).
- Reassign those users moving from Business Premium to Business Basic.
This keeps costs down while ensuring each user has the tools they need.
Why This Is a Good Time to Review Your Licenses
While this change is an inconvenience, it’s also an opportunity to evaluate your licensing needs. License reviews are often overlooked until a change like this forces the issue, but there’s real value in making sure you’re not overpaying or under-licensing.
Here’s what to consider when evaluating your Microsoft 365 licensing:
- Match Features to Roles
- Does everyone really need Business Premium, or could some users work effectively with Business Basic?
- Identify “power users” who need advanced security, device management (Intune), or Defender, and “light users” who primarily use email and Office apps. Consider Premium for the "power users" and Basic for "light users."
- Keep in mind that Business Basic only has access to the web and mobile version of the Office suite. Users can't install the Windows or Mac apps on their computers. For many people, this may be enough.
- Audit Service Usage
- Review your current use of Microsoft services like Intune, Defender for Office 365, Teams Phone, or SharePoint storage.
- Make sure your licenses include the services in active use. Consider removing licenses for unused services.
- Plan for Growth or Reduction
- Anticipate staffing changes in the coming year and adjust license counts accordingly.
- Remember that you can mix and match license types to get the right balance of cost and capability.
- Take Advantage of Nonprofit Discounts
- Microsoft offers deep nonprofit discounts for many licenses and add-ons. Always check nonprofit pricing before making a purchase.
By conducting a quick license audit now, you can often save money, improve security, and ensure your team has exactly what they need.
Final Thoughts
The elimination of the free Business Premium grant for nonprofits is a significant change, but it doesn’t have to cause disruption. The key is planning ahead — reviewing your needs, purchasing the right mix of licenses, and making the switch before your renewal date.
A little time spent now can prevent last-minute scrambles later and may even save your organization money in the process.
