by Brittany Powell
Determining what documents and files you need to keep can be a daunting task and all too often turns into a case of “I’ll keep this…just in case.” Establishing a formal document retention and destruction policy for your non-profit organization can help prevent clutter from piles of unneeded documents. In fact, a document retention policy is one of several policies that the IRS Form 990 asks specifically if a nonprofit organization has.
The IRS Form 990 instructions define a document retention and destruction policy as a policy that “identifies the record retention responsibilities of staff, volunteers, board members, and outsiders for maintaining and documenting the storage and destruction of the organization’s documents and records.” As the National Council of Nonprofits points out in its article, “Document Retention Policies for Nonprofits,” a written document retention policy provides consistency in the document retention/destruction habits of both staff and volunteers.
So, as your organization is spring cleaning, what documents should you keep and what can be tossed? The following categories are derived from the AICPA’s sample document retention policy and provide a guideline for how long certain documents should be kept.
Documents that should be kept permanently:
– Audit reports
– Correspondence regarding legal and important matters
– Deeds, mortgages, and bills of sale
– Determination letter from the IRS
– Tax returns
– Articles of Incorporation, Bylaws, etc.
– Minutes of board meetings and resolutions made by the board
– Retirement and pension records
– Trademark registrations and copyrights
Documents that should be kept for 7 years:
– Expired contracts, mortgages, notes, and leases
– Payroll records and summaries
– Personnel files for terminated employees
– Withholding tax statements
– Invoices (to customers and from vendors)
Documents that should be kept for 2-3 years:
– Bank reconciliations and statements
– General correspondence
– Duplicate deposit slips
– Employment applications
– Inventory records
– Correspondence with customers and vendors
These guidelines can help your organization begin establishing its own document retention policy and guidelines. However, as we become a more technologically-driven society, it is important to be consider documents stored in the cloud or on a server and to have a back-up plan in place for your electronic documents. Additionally, the National Council of Nonprofits points out in its article that organizations should give consideration to email records and how they fit into the procedures defined in the document retention policy.
If you have additional questions or would like additional information, please contact our office.