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How Long Should Nonprofits Retain Certain Documents?

Posted Jun 05, 2018 12:50 PM
Federal and state laws require the retention of certain documents and electronic records for a minimum amount of time, making it essential for nonprofit organizations to have a written retention policy that is faithfully followed.

Ultimately, the board of directors is responsible for assuring the organization is properly securing and retaining these documents and electronic records in accordance with their retention schedule. You can download this free infographic that shows our recommended minimum retention times:

Your own retention schedule should be governed by your state’s statute of limitations and whatever agreements have been spelled out in formal contracts. Of course, you are free to retain documents longer than is required if you choose to do so. Please note that nonprofits that serve children may need to retain records up until each minor turns 18 years old.

Why do nonprofits need to keep records for a set period of time? In the court of law, a plaintiff who seeks to make a claim against the organization must do so before a certain period of time. In the case of a lawsuit or government inquiry, having access to these documents is critical to combating legal trouble.

What your document retention policy should contain

A document retention policy generally establishes the length of time certain documents and electronic records should be retained by the organization. These guidelines assure the board is able to fulfill their duty of care.

It’s the responsibility of the executive director to comply with these policies and ensure these records are stored in a safe, secure, and confidential manner. There should also be a protocol for transferring “active” files to “inactive” storage at least once per year. Files that are confidential should be designated appropriately.

Also, keep in mind the difference between physical documents and electronic records. Physical documents should be stored in a dry, fire-proof location. Electronic files should be uploaded onto a secure server or cloud-based system with redundant backups available if necessary. Data should be backed up daily. And, the retention period is the same for both physical and digital files.

Need assistance writing a document retention policy? Tell us what you need and we’ll be glad to begin a conversation with you.