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 be 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:Â 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
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.]
Note that organizations that see patients or clients may also have special document retention and privacy policies related to patient and client information.