June 2019 – Rick Szilagyi, Principal

All nonprofit organizations need to have a document retention plan in order to guarantee access to documents when they are needed. Whether or not a Document Retention Policy was in place during the tax year is one of the policies the IRS asks about on your 990. If you do not have a policy in place, now is the time to establish one, along with the means of maintaining the documents themselves. The latter can be a real challenge to smaller organizations, especially in the nonprofit niche, where responsibilities for documents frequently shift as board members come onto and leave the board.

While keeping track of any documents charged to a board seat may be a challenge, establishing the policy itself is step one and doesn’t need to be a daunting task. Especially since there are plenty of articles, templates, etc., to guide you. And there are plenty of “centralized” storage options available, too.

A policy that establishes the parameters for your organization to follow relative to document retention should accomplish two main things:

  1. It should do exactly what you are probably already expecting – list specific types of documents and the length of time they are to be retained.
  2. It should also state the intent of your organization to maintain the integrity of documents that may be part of an official proceeding.

In general, a retention schedule will be broken down into several categories. Before I list just a sampling, two disclaimers. First, the chart below is an overview only, and second, please check with your particular state for its requirements. And, a clarification regarding your policy versus the chart below: When you establish your organization’s schedule, you will list EACH type of document, and you will have EXACT retention periods, not a range.

Document Category A Few Examples Retention Period
     
Governance Articles of
Incorporation; IRS
Determination Letter; Tax Returns; Bylaws;
Board minutes 		Permanently
Administration Insurance Policies;
Legal Correspondence; Contracts 		4 years to
permanently
Financial A/P and A/R schedules and ledgers; Audit
Reports 		10 years to
permanently

Additional sources of information:

The Lexian Management newsletter is for informational purposes only.

Always consult your attorney, accountant, and/or insurance provider to obtain advice with respect to any particular issue or concern.