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Model Document Retention Policy for Nonprofits
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Retention of documents related to lawsuits is one of only two provisions of Sarbanes-Oxley that are applicable to nonprofits. Nationally recognized nonprofit attorney Tom Silk wrote this Model Document Retention Policy on a pro bono basis for CompassPoint Nonprofit Services to use and to make available for all nonprofits.
This document management policy is designed to conform with the charitable laws of states which, like California, given the Attorney General an unusually long statute of limitations (10 years) within which to bring an action for breach of charitable trust.
Three items to note in particular: First, think about this as part of document management, rather than simply document retention; holding on to documents too long is an unnecessary expense. Second, there may some documents that are worth saving for the community's sake or for the sake of clients that go beyond these legal guidelines. And third, remember that e-mail messages are documents that should conform to these guidelines.
DOCUMENT MANAGEMENT POLICY
For each document, add its location or where it is stored.
Accounts payable ledgers and schedules: 10 years
Accounts receivable ledgers and schedules: 10 years
Audit reports of accountants: Permanently
Bank statements: 10 years
Capital stock and bond records: ledgers, transfer payments, stubs showing issues, record of interest coupon, options, etc.: Permanently
Cash books: 10 years
Checks (canceled, with exception below): 10 years
Checks (canceled, for important payments; i.e., taxes, purchase of property, special contracts, etc. [checks should be filed with the papers pertaining to the underlying
transaction]): Permanently
Contracts and leases (expired): 10 years
Contracts and leases still in effect: Permanently
Correspondence, general: 4 years
Correspondence (legal and important matters): Permanently
Depreciation schedules: 10 years
Donation records of endowment funds and of significant restricted funds: Permanently
Donation records, other: 10 years
[Note: Donation records include a written agreement between the donor and the charity with regard to any contribution, an email communication or notes of or recordings of an oral discussion between the charity and the donor where the representative of the charity made representations to the donor with regard to the contribution on which the donor may have relied in making the gift.]
Duplicate deposit slips: 10 years
Employee personnel records (after termination): 7 years
Employment applications: 3 years
Expense analyses and expense distribution schedules (includes allowance and reimbursement of employees, officers, etc., for travel and other expenses: 10 years
Financial statements (end-of-year): Permanently
General ledgers and end-of-year statements: Permanently
Insurance policies (expired): Permanently
Insurance records, current accident reports, claims, policies, etc.: Permanently
Internal reports, miscellaneous: 3 years
Inventories of products, materials, supplies: 10 years
Invoices to customers: 10 years
Invoices from vendors: 10 years
Journals: 10 years
Minute books of Board of Directors, including Bylaws and Articles of Incorporation: Permanently
Payroll records and summaries, including payments to pensioners: 10 years
Purchase orders: 3 years
Sales records: 10 years
Scrap and salvage records: 10 years
Subsidiary ledgers: 10 years
Tax returns and worksheets, revenue agents’ reports, and other documents relating to determination of tax liability: Permanently
Time sheets and cards: 10 years
Voucher register and schedules: 10 years
Volunteer records: 3 years
Warning: All permitted document destruction shall be halted if the organization is being investigated by a governmental law enforcement agency, and routine destruction shall not be resumed without the written approval of legal counsel or the Chief Executive Officer.
[Note: this language, which is not typically included in document management policies from accounting firms, provides important addtional guidance and protection for the organization.]
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Note that organizations that see patients or clients may also have special document retention and privacy policies related to patient and client information.
See also:
Comments
This is a bit disappointing. This listing doesn't seem to be tailored to a nonprofit organization. How long should records relating to donor gifts be kept? The answer is different depending on whether there are restrictions on the gift.
And this is an operational policy. Is there a good sample of a board level policy?
This list is great, and I appreciate the acknowledgment of state laws with a longer statute of limitations, however I agree about the lack of tailoring to nonprofits, particularly for the same reasons (donor records).
Also, with payments via credit card increasing, shouldn't some allowance for confidential credit card information be made? I get nervous about keeping credit card numbers for donors for as long as ten years.
I took donor records to be covered by Accounts Receivable.
My question is this: how does email correspondence fit in to records retention?
Thanks to you Blue Avocado readers who brought the absence of donor records and other items to our attention. Tom Silk has amended and clarified the policy (July 2009) and we hope it will be helpful. Thank you for your comments . . . such comments are contributions to all the readers. Jan
Where can I get the July amended policy?
The policy has been amended on the site, so that the one now up is the amended one. Thanks for asking!
A true records retention policy should cite specific laws and regulations to back up it's retention periods. Anybody can put together as list of document and record types and say that's how long you should keep them.But why? The citing of specific legal authority is what makes the retention schedule useful for combating claims of spoliation in litigation. If you were following your policy and schedule and were acting on good faith because you believed that a specific law or regulation was controlling in terms of your retention period then it will go a long way toward stopping an adverse jury instruction about unlawful destruction of documents - even if you were in error about the controlling law or regulation as it applied to your case.
Re the prior comment: I've practiced law since 1992 (and had the immense pleasure of working for some years with Tom Silk, who founded the largest nonprofit law firm on the West Coast decades ago). In my experience, which includes five years of litigation and subsequent corporate practice at a national firm, it is extremely rare to see a policy that is produced for a client and intended for practical use by the Board larded with footnotes to all the different cites that apply. I'd be curious to know if the prior commentator actually sends this kind of product to clients on a regular basis.
Where can I read the California codes that pertain to document retention for donor gifts and gift certificates
thank you
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