As we continue this journey into 2025, we’ll be starting a series of reminders on ways to fortify your organization. First up: your document retention policies!
If you don’t have a policy in place yet, it’s imperative that you do. This policy is in place to outline how to you manage your files – including email and all electronic records. A sample is attached to this post for your download and use. It’s important that you review with your legal counsel to ensure alignment with any state and local document retention regulations. The full form 990 does also ask a question if you have this policy in place (Part VI, Section B, line 14 – get to know that 990!) so be sure to have it in place to check yes.
If you are fiscally sponsored, you may fall under the documentation retention policy of your fiscal sponsor. Now’s the time to get that clarity from your sponsor, and if you do fall under their policy, make sure you receive a copy of it, and follow it. If not, you may need your own policy.
It’s more than just a 990 check mark or a policy to file way – it’s an important tool to fortify and protect your organization and work by understanding & following that policy.
Your organizations are bound by various legal and regulatory requirements at the federal, state & local levels. These may include tax filings, contracts, grant agreements, and employment records. By establishing a comprehensive document retention policy, nonprofits ensure that they retain the right documents for the correct amount of time to comply with all regulations.
In some cases, failing to retain essential documents can expose the organization to audits, fines, or even legal action. In other cases, keeping documents after their documented shelf life can open you up to risk. A clear policy helps mitigate such risks by outlining which documents should be kept and for how long.
It’s not always the most fun work, but an efficient and clear filing system will save you time. It not only will help you find the documents that you need when you need them (and sail through those audit times), but will also help you determine when documents are no longer needed in your file per your policy. We have a sample filing system set-up attached here to help support your online filing structure.
It’s essential to maintain records regarding employment or volunteer history. These records can include applications, job descriptions, on-boarding materials, performance evaluations, employee separation documentation, and training materials.
When you establish a retention policy for these documents, you ensure that you are legally compliant with employment laws, particularly when it comes to storing personal information, health records, or other sensitive details. It will also keep the organization clear on what documents are not needed or no longer needed for the files. For those of you that are unionized, be sure that your policy is aligned with any employment or other documentation requirements in your contract.
As your organization may face an attack from a federal or local entity, having a system in place allows for easier access to historical records.
For example, let’s say your c3 faces an attack that it’s carrying out c4 or political work. Having well-documented timesheets detailing the staff’s work on the various related organizations would help prove the allegation false. Organized files could help you weather these attacks quickly and effectively. Additionally, you don’t want to be wading through documents that should have been disposed of during the normal course of your business, per the policy.
A clear and organized document retention policy is an invaluable tool to help make sure your documents are clear, organized and disposed of properly. Be sure you have the right policy in place and the processes in place to follow it. When facing attacks or uncertainty, it’s a clear way that you can use your finance & ops superpowers to help fortify your work.
A well-structured document retention policy is essential for maintaining compliance, ensuring efficiency, and protecting your nonprofit from risk. To help you get started, we’ve provided a sample file retention policy and a Dropbox folder organization structure designed to keep your digital records clear and accessible.
