Think of a document retention policy simply as a document management policy. It is unwieldy and unrealistic, as well as unnecessary, to think that a nonprofit will keep every document it generates. Normally it is fine to clean up your desk by tossing out papers here and there, but when one staff person presses delete on a key document, and that document is needed later – or if the subject of the document is under legal investigation and it appears that the nonprofit deleted it as a cover-up – trouble can follow. Adopting a written document retention policy ensures that staff and volunteers follow consistent guidance about document retention and that document destruction/deletion becomes a routine business practice of the nonprofit.
Developing a document retention policy may seem overwhelming at first, but think of it as simply a record of what types of documents the nonprofit must retain and for how long. The policy should specify that the nonprofit will also adhere to a regular business practice of document destruction according to the schedule referred to in the policy.
Document retention policies are one of several good governance policies that the IRS highlights on the Form 990 by asking whether the filing nonprofit has adopted a written record retention policy.
A document retention and destruction policy 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.
Source: Instructions to the Form 990 page 24
Unfortunately, there is no regulation or guideline for document retention that covers all nonprofits, and we hesitate to provide a template. Each nonprofit needs to investigate and learn what its own state law requires as well as seek to retain only those documents that are relevant to activities of that particular nonprofit. Not only do state laws differ as to what must be retained, but nonprofits vary in the types of documents they generate. However, it is possible to identify a handful of documents that every charitable nonprofit should save permanently, as well as others that should be saved for a certain length of time by most nonprofits.
These categories can serve as starting point for checking state-specific regulations that address document retention or destruction rules:
→ Corporate governance, credit card transactions, donor records, employment matters, fundraising activities, licenses (for such things as raffles), insurance, investments and banking, serving/treating patients, programs and activities, real estate sales, leases and other contracts with vendors, tax-exempt certificates issued by the state.
Your local state association of nonprofits may offer a state-specific sample document retention policy as a member-only resource.
. [T]he adoption of a document retention policy sets guidelines and facilitates directors’ fulfillment of the duty of care, establishes transparency and ensures compliance.
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