“In Residential Funding Corp. v. DeGeorge Fin. Corp. 306 F. 3d 99 the 2nd U.S. Circuit Court sounded a grim warning for companies lacking a sound electronic document retention policy: if you wind up in court and can’t produce the goods, you may be liable!” 1

            Associations, like for-profit companies, have legal requirements for document retention. The items that need to be retained haven’t changed too much over the years – tax information and IRS documents (like your original non-profit status confirmation letter), correspondence among board members, meeting minutes (board and committee), publicly filed documents, employment records (if any), and the like – but the means of storage available have developed extensively over the last few years.  Impervious to fire, flood and other physical disasters, digital electronic storage has become the favored way to keep information. Digital retention is good, as long as you have a policy in place to ensure that updates are done frequently to keep up with changes in technology.  In one instance, a company was sued and lost $96.4 million because, while they had the documents they needed in court in storage, they were unable to produce them because they’d been stored on old backup tapes that were no longer accessible and had never been updated to newer media.  In other words, you can digitally keep every scrap of every piece of paper and it won’t help you at all if you can’t get a printed copy when you need one.

            When and how to purge documents can also be problematic.  For a while, the prevailing philosophy was “when in doubt, delete it;” however, anyone who used to work for Enron or Arthur Anderson can attest that this is not a wise policy. When in doubt, keep it.  It is now so easy and uncluttered to store things electronically, and the media to do it so inexpensive, there’s no reason not to keep anything about which you aren’t certain.

            If you don’t have a volunteer or staff member knowledgeable in current electronic storage options on hand, it is well worth the consultation fee to bring one in to assist in designing a storage system that will take into account all of the following considerations:

 

            * On-site storage, off-site storage, cloud storage, or some combination.

* How does information need to be accessible (one, office-based computer, one or more laptops or portables, etc.)

* What format is most appropriately searchable for the type of information being kept, and who needs access?

* A succession policy so that no matter who occupies what position within the organization, there is always a clearly-designated person both responsible for and authorized to update storage media and locate documents quickly as needed.

 

            Below is a more complete list of what, at minimum, is required to be kept and for how long, although, again, “when in doubt, keep it!”

 

Permanent:

Corporate Records

Article of Incorporation to apply for corporate status

IRS form 10123 to file for tax exempt and/or charitable status

Letter of Determination granting tax-exempt and/or charitable status

By-Laws, all versions – original and any/all revisions

Board policies

Resolutions

Board meeting minutes

Sales tax exemption documents

Tax or employee identification number designation

Annual corporate filings

 

Financial Records

Chart of Accounts

Fiscal policies and procedures

Audits

Financial statements

General ledger

 

Tax Records

Annual tax filing for the organization (IRS Form 990)

Payroll registers, if any

 

Personnel Records (if any)

Employee offer letters

Confirmaiton of employment letters

Benefits descriptions per employee

Pension records

 

Insurance Records

Property insurance policy

Directors and officers insurance policy

Workers’ compensation insurance policy

General liability insurance policy

Insurance claims applications

Insurance disbursements /denials

 

Contracts

All insurance contracts

Employee contracts

Construction contracts

Legal correspondence

Loan/mortgage contracts

Leases/deeds

 

Donations/Funder Records

Grant dispersal contracts

 

Seven Years

Financial Records

Check registers/books

Business expenses documents

Bank deposit slips

Cancelled checks

Invoices

Investment records (deposits, earnings, withdrawals)

Property/asset inventories

 

Tax Records

Filings of fees paid to professionals (IRS Form 1099)

Payroll tax withholdings

Earnings records

Payroll tax returns

W-2 statements

 

Personnel Records (seven years after termination)

Employee applications and resumes

Promotions, demotions, letter of reprimand, termination

Job descriptions, performance goals

 

Contracts

Vendor contracts

Warranties

 

Donation / Funder Records

Donor lists

Grant applications

Donor acknowledgements

 

Management Plans and Procedures

Strategic plans

Staffing, programs, marketing, finance, fundraising and evaluation plans

Vendor contacts

Disaster recovery plan

 

Five Years

Personnel Records

Worker’s compensation records

Salary ranges per job description

(five years after termination)

I-9 Forms

 

Three Years

Financial Records

Petty cash receipts/documents

Credit card receipts

 

 

Citations:

 

1.         French, Paul, (2004)  “Electronic Document Retention Policies (And Why Your Clients Need Them),” Law Practice Today, 1