Document Retention for Nonprofits

The end of a year and beginning of a new one is a good time to clear out files which are no longer needed.  It will free up limited file space for those documents which are required by the IRS and state laws to retain.

The National Council on Nonprofits lists the following documents as needing to be permanently retained:

  • Articles of IncorporationDocument shredding
  • Determination Letter from the IRS
  • insurance policies
  • minutes of meetings
  • corporate resolutions

Record Retention Guidelines for Indiana
An Indiana nonprofit corporation should also maintain and retain copies of important business records listed above and the following:

  • In addition to minutes, written consents or ballots reflecting official action;
  • records reflecting all actions taken by committees of the board of directors;
  • all balance sheets, income statements, and other significant accounting records;
  • bylaws, including any amendments;
  • the corporation’s application for exemption from federal income tax (IRS Form 1023),
  • including all supporting materials and correspondence submitted to the IRS;
  • the corporation’s Form NP-20A (if any);
  • all federal and state returns filed with the IRS, the Indiana Department of Revenue, and other authorities with respect to income, sales, use, payroll, employment, property, and other taxes;
  • all annual business entity reports filed with the Indiana Secretary of State;
  • and similar important forms, policies, procedures, documents, and material.
Retention and Destruction Policy
It is also a good time to write a Document Retention and Destruction Policy if your organization does not yet have one. The process of developing a document retention policy involves:
(1) Identifying what types of paperwork (and electronic files) your nonprofit generates;
(2) Determining the appropriate (and legal) length of time to retain them; and
(3) Recording those retention times on a written schedule. See more at the NCN.
See a Sample Document Retention and Destruction Policy from the American Institute of CPAs and a Record Retention Guide from The Massachusetts Society of CPAs, Inc.

Other Sources:

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