In the course of business, your organization will produce a significant amount of physical and digital documents and paperwork. You’ll need to decide what to keep and for how long. It would be unwieldy, and unnecessary, to keep everything, but you should be deliberate about deciding what information and which documents are valuable long-term and the time frame for destroying them. You should formalize this in a written document retention policy.
There’s not a single guideline to use for document retention policies, since state laws vary in what they require you to keep, and nonprofits in different industries produce different types of documents which may have related guidance for how long to keep them. If you receive federal or other government funding, your funder(s) may require you to keep documents related to your grant or contract for a certain period of time. That being said, there are certain categories of documents that have generally accepted minimum lengths of time for which they should be kept. The following table is adapted from the National Council of Nonprofits and the AICPA.
- Accounts payable ledgers and schedules: 7 years
- Audit reports: permanently
- Bank reconciliations: 2 years
- Bank statements: 3 years
- Checks for important payments and purchases: permanently
- Contracts, mortgage notes, and leases: 7 years after the contract ends
- General correspondence: 2 years
- Correspondence about legal and other important issues: permanently
- Deeds, mortgages, bills of sale: permanently
- IRS determination letter for income tax exemption and related correspondence: permanently
- Depreciation schedules: permanently
- Deposit slips: 2 years
- Employment applications: 3 years
- Expense analyses and distribution schedules: 7 years
- Year-end financial statements: permanently
- Insurance records, accident reports, claims, policies, etc.: permanently
- Inventory records: 3 years
- Organizational charter and bylaws, including amendments: permanently
- Minutes of board meetings: permanently
- Patents, trademark registrations, copyrights, and related papers: permanently
- Payroll records: 7 years
- Personnel files: 7 years
- Retirement and pension records: permanently
- Tax returns and worksheets: permanently
- Timesheets: 7 years
Document retention policies should address how long each type of document should be kept, and when they should be thrown away or destroyed. It should address both physical and digital records, and in what location and method documents will be stored, e.g. onsite, at a storage facility, in the cloud or a digital archive, etc. If there is any pending, ongoing, or foreseen government investigation, private litigation, or audit, the schedule for destroying documentation should be put on hold until the investigation is resolved since you may need to produce those documents during the legal discovery phase.