Does Anyone Have a Copy of Our IRS Letter of Determination? (Record Keeping for Nonprofits)

July 2018 – Rick Szilagyi, Principal

One of the great challenges for small nonprofits that do not work with an Association Management Company is keeping track of data as board members come and go.

Sorry about the obvious plug for AMCs, but the problem is real.

As with any organization, maintaining documentation for your nonprofit is important. I am going to be very brief here, and not attempt to itemize every single document that should be maintained.

When the decision is made to file with the IRS to become a tax-exempt organization, Form 1023 is filed to become a 501(c)(3), and one of two versions of a 1024 is filed for other types of 501(c) organization. Along with one of these forms, depending on the type of 501(c), other documents need to be included with the submission, such as the Articles of Incorporation, etc. Assuming all is submitted in accordance with IRS requirements, the IRS generates a Letter of Determination. This is sent to the nonprofit, stating it has been approved as a 501(c) organization. All of these documents – the submissions documents and the Letter of Determination – are important but are frequently misplaced by small nonprofits over time.

In addition to digital copies, we recommend keeping a notebook containing hard copies of certain documents. Those cited above are the first to include. Beyond these, it is wise to have copies of the most recent state and federal tax filings, current insurance policies, current contracts, current and at least the most-recent past version of the bylaws, and copies of any formal policies established by the organization, such as Conflict of Interest, Record Retention, etc.

Minutes from board meetings must be maintained, but it is often more user-friendly to keep them in their own binder. Bookkeeping and accounting records need to be maintained, as well, and are likely handled separately, both in hard copies and digitally in a software package or package module focused on that segment.

A little time spent on devising your system for maintaining important documents WILL save you a lot of time and, at some point, great frustration. Guaranteed.