Microsoft 365 Nonprofit Pricing in 2026: Free or $5.50 per User?

Is Microsoft 365 free for nonprofits?

Partly. Microsoft's nonprofit offers page lists Business Basic free for up to 300 users and Business Premium at $5.50 per user per month, paid yearly, as of October 2026. "Free" covers web and mobile apps only. Anyone who needs desktop Word, Excel, or Outlook needs a paid license.

What changed, and why your bill may have gone up

Until 2025, many small nonprofits used the free 10-seat Business Premium grant and paid nothing. That grant was retired at renewals on or after July 1, 2025, along with the Office 365 E1 grant (Pax8 summary). If your renewal fell after that date and you suddenly saw a bill, this is why. Our Business Premium grant explainer walks through the timeline.

Separately, secondary sources report that commercial list prices rose on July 1, 2026: Business Basic from $6 to $7, Business Standard from $12.50 to $14, with Premium unchanged at $22 (UC Today). We could not confirm these on microsoft.com because the pricing page renders prices with JavaScript.

What the discount actually covers

• Business Basic (free): Outlook, Teams, Word, Excel and the rest on web and mobile, Copilot Chat, 1 TB of cloud storage per user.
• Business Premium ($5.50/user/month, paid yearly): adds desktop apps and Microsoft's business security features.
• Business Standard: desktop apps without Premium's security tools. The nonprofit price is unconfirmed: $3.00 in Microsoft page snippets, $3.50 in 2026 secondary sources.

Worked example: the mixed-license approach

A 10-person nonprofit pays commercial Business Standard for everyone. Four staff (finance and development) live in desktop Excel; the other six mostly use email, Teams and documents in a browser.

• Current cost: 10 × $14 × 12 = $1,680 per year (using the reported July 2026 list price)
• Everyone on free Business Basic: $0, but finance loses desktop Excel
• Mixed: 6 on Business Basic at $0 + 4 on Business Premium at $5.50 × 12 = $66 each, so 4 × $66 = $264 per year
• Saving: $1,680 − $264 = $1,416 per year

Putting all 10 on nonprofit Premium would cost 10 × $66 = $660, still $1,020 less than today. The mixed approach saves another $396 by not paying for desktop apps nobody opens.

To find the right split, list each person and ask one question: do they need an installed Office app, or does the browser version cover their work? The free audit can model the split against your actual seat count.

Who should and shouldn't switch

Switch if you are paying commercial Microsoft 365 rates and can verify through Microsoft Nonprofits. Nonprofit licenses can usually be applied to your existing tenant, so mailboxes stay put.

Be careful moving people from Standard or Premium down to Basic: they lose desktop apps. Tell them before the change, not after.

Compare against Google if you are open to switching platforms. Google's free edition supports up to 2,000 users but has no Meet recording. See Google Workspace vs Microsoft 365 for nonprofits and the Google Workspace page.

Church eligibility

Microsoft requires recognized charitable status, such as 501(c)(3) in the US, verified through Microsoft Nonprofits. Our data does not capture Microsoft's full list of excluded organization types, so review Microsoft's eligibility guidelines before you plan around the grant. Our church eligibility guide covers the documentation churches typically need.