Over 170,000 Nonprofits Lost All Their Data. Is Microsoft to Blame?
When the tech giant retired a popular software grant, years of nonprofit data vanished with it.
By Nitish Pahwa
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Aug 18, 20265:40 AM
Photo illustration by Slate. Photos by Getty Images Plus.
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Ronald Khosla, a former vegetable farmer and tech entrepreneur, keeps things simple at his nonprofit: He’s the co-founder, president, and head of IT for Canopy, a modest venture firm that offers capital to startups trying to protect and sustain our natural world.
“There’s no paid staff, and we mostly support niche tech projects, like people exploring new ways to preserve trees in Morocco or to regeneratively regrow a pasture in Oregon,” Khosla told me.
Keeping such a sparse, specified operation going means narrowing budgets wherever possible, especially when it comes to managing Canopy’s investments and data. For that, he’s depended for years on special licenses Microsoft has granted to smaller-size nonprofits around the world, offering them a premium suite of Office apps (Word, Excel, OneDrive) at no charge.
At least, he did until June 11, when Khosla logged on to find that all the Canopy data stored with Microsoft had been deleted. He immediately called the tech company’s support staff, who said Canopy could retrieve its files. Later, they called back to inform him that, actually, those were gone forever.
What happened to Khosla was just one instance of a crisis that has rocked small nonprofit owners across the globe, who allege that Microsoft failed to communicate with them in a substantive manner about the license cancellations and left them unable to prepare their organizations for the future. As they’ve related online, these already resource-strapped nonprofits have lost troves of data, are struggling to continue their operations, and have been left unable to make up the technology gaps with alternative services. People who run service orgs with low budgets and benefited for years from Microsoft’s programs no longer have much of the technology they need to keep things going—for either the short or long term.
Khosla had seen Microsoft’s announcement last year that it was winding down its free nonprofit licenses beginning July 2025, but, per the record, he should have still been in the clear. He renewed Canopy’s yearly license last October, and Microsoft had emailed him to confirm he would retain access until Oct. 4, 2026. Khosla had no reason to expect anything would change, and he received no additional warnings—even as Microsoft kept in regular touch about other software updates. And he later learned he wasn’t alone, when another company service representative called the very next day and told him that roughly 171,000 small nongovernmental organizations “lost everything” in their OneDrive accounts.
In a statement emailed to Slate, Microsoft wrote that the original offers were “retired to streamline our grant offerings and simplify our grant portfolio,” adding, “We strongly advised our nonprofit customers and partners to transition to a different Microsoft 365 offer for nonprofits before their renewal date to avoid disruption and data loss.”
Khosla forwarded me the first email he had received, in May 2025, informing him: “The Microsoft 365 Business Premium grant will be discontinued on your next renewal on or after July 1, 2025. Your licenses will expire on October 4, 2025.” But, when Khosla renewed the license for another year, there was no additional information on the phaseout process in that confirmation email (which Khosla also forwarded to me), and there were no follow-up reminders sent after that.
One source who spoke to me on the condition of anonymity runs a child healthcare organization that lost everything; having sifted through the org’s email archives, spam and everything, he found “zero notification” from Microsoft about the license termination, even though he kept receiving official invoices listing $0 software charges. Another told me she was able to save the data for her D.C. nonprofit thanks to the help of an IT firm she contracts with, but insisted that neither she nor her tech team received any advance notice. On Reddit, and across Microsoft’s own Tech Community forums, more such claims abound of surprise deletion without notification. (Microsoft stated that it “began notifying nonprofit customers in Spring 2025” and offered “support” throughout the transition period.)
This was not a universal experience. Some commenters noted that they had received a May 2025 message from Microsoft warning of the coming grant phaseout, and others acknowledged occasional reminders to that effect; they were able to migrate their data to different platforms in a timely fashion. But one county historical society director based in Minnesota said she never got a single reminder after the May email. Some clients complained that even if Microsoft reached out, the messages rarely made sense. On the forums where Microsoft’s nonprofit cancellations were initially discussed in 2025, a user wrote that they’d assumed that those alerts were spam because Microsoft, at that time, was still promoting the free nonprofit grants on its website. The grant rollback was technically public information, but few would have known to look out without an emailed heads-up, and fewer still would have known where to find it, as it was not so prominently published alongside the corporation’s front-page, A.I.-emphasizing press releases. (As the D.C. nonprofit worker said: “If I don’t think that there’s going to be a change, why would I go monitor Microsoft’s page?”)
George Weiner, a nonprofits expert who runs the marketing consultancy Whole Whale, was made aware of Microsoft’s grant retractions from the very beginning, only by happenstance. “The announcement was buried on some info page and passed around by clients who were like, ‘Is this for real?’ ” he told me. “For a program that’s been around since 2013, it was shocking that you’d come across its cancellation, effectively, in the corner of the bowels of a subpage of the internet.”
Weiner, who has managed literary nonprofits in the past, was well aware of how Microsoft’s change-up would affect the 400,000 small orgs that had taken advantage of the program, and tried to raise broader awareness. The sweeping majority of American nonprofits operate with annual budgets under $1 million; the value they got from Microsoft’s free business software equated to about 30 percent of their IT spend, he told me.
“Microsoft wasn’t giving much of an off-ramp, and they were dropping their security package during a critical time for nonprofits, when we’re seeing A.I.’s ability to penetrate more organizational infrastructure,” said Weiner. “They primarily emailed the nonprofits’ administrative accounts, and they were rolling off about 33,000 organizations per month. It would be very easy for someone to go on vacation at the wrong time and come back only to wonder what happened to all their data.”
It was, indeed, very easy to miss the warnings. The admin emails to which Microsoft sent those notifications tend to get slammed with junk from spammers, leading software developers to recommend ignoring those inboxes altogether. One source, who helps his mother run a disability services nonprofit and spoke to me on the condition of anonymity, told me he had all key nonprofit communications from Microsoft, including tech support, directed to a Gmail address, since neither he nor his mother found the Outlook interface intuitive or useful. (“Nothing else came to that email except for our invoices, which always read $0.”) After the nonprofit’s data was purged in June, he realized that he’d gotten two emails warning about the impending license suspension to his admin account, which did not automatically forward to his Gmail, and which he could not view on Outlook’s desktop interface—only on the web app. (I asked my other sources if they’d double-checked their own administrative addresses, and they insisted no warnings had come through; Microsoft did not address my queries regarding the structure of the admin accounts.)
The Big Tech behemoth did not offer a reason to me as to why it pulled the plug on a widely used program and then rendered its clients’ data irretrievable, beyond its already-professed goal of “streamlining” and “simplifying” its grants. Weiner suspected it was in part political, a way to sidestep Trump administration scrutiny over inadvertent Microsoft support for orgs the government did not like. But the company still does offer nonprofit services. The issue is that once-free premium features are fenced off at higher prices, and the more-cost-effective options work nowhere near as well. The D.C. nonprofit owner told me that her team has been working with online versions of Office apps, instead of their desktop counterparts, and has found that documents will often crash and lose work if multiple people collaborate on a given project.
The context surrounding Microsoft’s decision gives some clues. The PR trade-offs of nonprofit support are very different now from when Microsoft began offering these grants in 2013. At that time, charitable giving was trendy in the tech sector, with brands like Microsoft boasting of their employees’ multimillion-dollar donations—complete with matching funds—and the companies’ own philanthropic efforts. In more recent years, as Microsoft has struggled to catch up in the A.I. race and faced public skepticism over its purported social justice commitments, the company has refocused on supercomputing and on primarily appeasing the man who could help this pursuit (President Donald Trump), whatever the costs. Hence, “donations” were redirected toward Trump’s inauguration fund and the White House ballroom, while expenses were slashed across myriad non-A.I.-specific divisions: video gaming, marketing, and LinkedIn, for example. Meanwhile, Microsoft desperately needs more room for data storage as A.I. is added into all its major products. We’ve already seen Big Tech names like Meta and Google erase user data and impose limits on virtual storage as A.I. expenditures balloon and memory becomes more expensive.
The small nonprofits left behind are now visibly struggling. The childhood healthcare nonprofit operator I spoke to lost about 500 gigabytes of his firm’s data—which he didn’t back up externally because OneDrive offered automatic backup syncing—as well as access to two particular apps, Power Automate and Forms, that he found useful for handling affairs with donors. (“There’s no easy or quick alternative that we can make work in the short term.”) The man who runs the disability services nonprofit wrote to me that it’ll take him and his mother “hundreds of hours” to fully re-create the instructional videos and documents that went poof.
For his part, Ronald Khosla happened to keep up a yearly habit of storing all Canopy data in an external hard drive, because “Microsoft does not make backup easy,” he told me. That drive is physically stored on the East Coast—across the country from where he resides, in Oregon, which means he’ll have to make a flight to restore said data onto a different cloud provider while rejiggering his nonprofit’s software library. “Multiple people need access to that data, so we’re all in limbo until I fly back,” he said. “We’re losing time and money, but we are going to survive.”