Look at the WorkGroup edition of SQL Server. Its a little bit cheaper and it doesn’t have the database size limit.
You can upgrade from SQL 2005 Express to SQL 2008 Workgroup (or higher) directly. You don’t need to upgrade from SQL 2005 Express to SQL 2005 standard first.
If you want you can upgrade to SQL 2005 Workgroup or higher easily. Just run the installer for the new edition with the /SKUUPGRADE switch. If you don’t have a reason to upgrade the version of SQL Server you probably shouldn’t without a lot of testing.
As a non-profit you might be able to get some decent pricing from Microsoft. Check with your local sales Microsoft rep.