Unless the licensing agreement requires that you arbitrate the dispute, you are free to sue the nonprofit. However, be prepared for the fact that no matter how many copies are sold, your recovery may be limited to $250 (and possibly interest). That's because we think you're dealing with a breach of contract situation in which the remedy is usually compensatory damages. That means the court attempts to put you in the financial position you would have been in if the contract had been performed. Another possibility is to claim that the failure to pay is a material breach of the agreement that entitles you to cancel the agreement. You would write to the nonprofit and tell them the agreement is canceled and any further use of the photo after the termination will be considered copyright infringement. Because the compensatory damages are relatively small, you should try to avoid court and seek payment via correspondence. If that fails, you can handle the matter yourself in small claims court, (assuming the nonprofit is doing business in the state in which you are suing).
Avoiding this problem in the future. To best protect your rights in the future, try to include the following language in any photo licenses: “Company shall have no right to make any use of the work until Licensor (photographer) has been paid the fee established in this Agreement. Any unauthorized use constitutes a willful infringement.” If that clause is in effect in your agreement and the other party fails to pay, you can sue for copyright infringement.