Keep or delete? Nonprofits, here’s what you need to know about record retention.
Record retention policies (also called a ‘schedule’) describes how long an organization needs to keep a piece of information (record), where it’s stored, and how to dispose of it when the time comes.
Having a record retention policy is critical to maintaining compliance and reducing risks. It also helps organizations save storage and operating expenses when dealing with large amounts of printed or digital files.
Practical Consideration: Document retention policies apply equally to documents saved in the cloud, on a server, or in a filing cabinet. If your nonprofit is using digital storage, make sure you have a back-up.
Document retention policies are one of several good governance policies that the IRS highlights on the IRS Form 990 by asking whether the filing nonprofit has adopted a written record retention policy.
What should be retained?
Guidelines for record retention vary greatly, based on the types of documents the nonprofit generates as well as state and local laws. Some documents need to be permanently retained, while others have a shorter retention period.
The following is a summary of common recommendations for nonprofit record retention that can generally serve as a good starting point for checking state-specific regulations.
|Annual reports to the secretary of state or attorney general||Permanent|
|Articles of incorporation||Permanent|
|Board meeting and board committee minutes||Permanent|
|Board policies and resolutions||Permanent|
|Fixed asset records||Permanent|
|IRS application for tax-exempt status (Form 1023)||Permanent|
|IRS determination letter||Permanent|
|State sales tax exemption letter||Permanent|
|Contracts||7 years after termination|
|General correspondence||3 years|
Accounting and Corporate Tax Records
|Annual audits and year-end financial statements||Permanent|
|IRS Form 990 tax returns||Permanent|
|General ledgers||7 years|
|Business expense records||7 years|
|IRS Form 1099||7 years|
|Journal entries||7 years|
|Sales records (books)||5 years|
|Petty cash vouchers||3 years|
|Cash receipts||3 years|
|Credit card receipts||3 years|
|Check registers||7 years|
|Bank deposit slips||7 years|
|Bank statement and reconciliation||7 years|
|Electronic fund transfer documents||7 years|
Payroll and Employment Tax Records
|State unemployment tax records||Permanent|
|Garnishment records||7 years|
|Payroll tax returns||7 years|
|W-2 statements||7 years|
|Employment tax records||At least 4 years after filing the year’s 4th quarter taxes (or longer, if required by state law)|
Human Resource Records
|Employment and termination agreements||Permanent|
|Retirement and pension plan documents||Permanent|
|Records relating to promotion, demotion or discharge||7 years after termination|
|Accident reports and workers’ compensation records||5 years|
|Background checks, drug test results, driving records and employment verifications||5 years|
|Resumes, employment applications and related materials (including interview notes) for employees||4 years after termination|
|Resumes, employment applications and related materials (including interview notes) for applicants not hired||3 years|
|Timesheets, compensation history and job history||4 years after termination|
|Performance appraisal and disciplinary action records||4 years after termination|
|I-9 forms||3 years after hire date or 1 year after employment ends (whichever is later)|
Donor and Grant Records
|Donor records and acknowledgment letters||7 years|
|Grant applications and contracts||7 years after expiration|
Legal, Insurance and Safety Records
|Real estate documents||Permanent|
|Stock and bond records||Permanent|
|Leases||7 years after expiration|
|OSHA documents||5 years|
|General contracts||3 years after expiration|
Contact D+L for Guidance on Record Retention Policies
For nearly 50 years, Dugan + Lopatka has partnered with nonprofit organizations to navigate every step of the financial journey. At D+L, our CPAs and consultants are always on the cutting edge of changes in the nonprofit sector. We understand the challenges you face—the special accounting, auditing, and reporting requirements of your organization—and we use our deep expertise to deliver exceptional service tailored to your needs.