The software giant already offers its Office Accounting Pro program for free, apart from a £6 admin fee, through the Charity Technology Exchange - the only such free accountancy program, according to CTX.
But Microsoft intends to develop an improved version of the program specifically for charities.
"Charities face complex fund-management problems, but don't always have a lot of money," said Julian Price, head of citizenship at Microsoft UK. "They have unique accounting needs, such as how to account for donations and when and where they're spent.
"We're going to research added features that will offer charities more functionality, and they will be able to download it for free. We're looking at having something ready by the end of the calendar year."
Gareth Arnold, senior Microsoft product planner, said: "Microsoft currently offers 140 of its products online to charities through CTX, but adoption of this programme in the UK is too low - we want more charities to realise what they can get for free."