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If you are a board member or part of the financial leadership of a nonprofit, the question of how best to handle important organizational documents has probably come up more than once. How long do you keep important records like tax returns and financial statements? What determines how long you need to store old records, and what do you need to formalize the process so everyone is aware of document compliance?
Two key issues must be settled. First, a discussion about what documents need to be preserved and for how long. Second, the organization should draft or update a company-wide record retention policy that can and should be articulated to the entire team, revealing how these records should be handled and stored.
Creating Your Document Retention Policy
A retention policy is a foundation document with legal impact. Since every employee will need to follow your policy, keep the rules simple. If a policy is too complex or confusing, it may be ignored by team members, and, if a problem surfaces, the ramifications may be worse for your nonprofit than if you had no policy. Keep things clear, simple, and as easy to comply with as possible.
No business or nonprofit is identical, so the policy you create should reflect the needs of your individual organization, including state, federal and industry requirements. Because regulations differ so vastly, it is unadvisable to simply adopt a template policy offered from an industry association or government website without customizing it to reflect your specific needs. Each section should be considered for its relevance to your organization. Some considerations include:
- Is there a legal reason for keeping the document (potential lawsuits, conflicts, governmental requirements, or contracts and proprietary properties like licenses, patents, and copyrights)?
- Is there a compliance requirement (tax returns, audit reports, board meeting notes, employment records, etc.)?
- Is there a business reason (client communications, sales, donor information, marketing initiatives)?
Every state has rules regarding record retention. Nonprofits operating in regulated industries may have additional retention rules specific to their business that require your investigation.
What to Keep Forever
Your nonprofit should keep some records forever, including:
- Founding documents, such as
- Articles of Incorporation, including any subsequent amendments, resolutions, and board minutes
- Determination Letter from the IRS, and correspondence relating to it
- Financial records, including
- Checks *
- Tax returns, including worksheets, as well as state and local data*
- Audited financial statements (year-end)
- Other audit reports
- Grants, donations, endowments, including restrictions
- Insurance policies
- Annual meetings of members
- Ownership records, including
- Real estate deeds, mortgages
- Bills of sale
- Patents, trademarks, and copyrights
*Organizations are only obligated to keep these records for 7 years for IRS statute of limitations purposes. However, multiple nonprofit associations suggest an organization may want to keep these records permanently for public relations, legal or donor confidence reasons.
Information to Retain for a Decade
This is a baseline of documents to retain for a decade. There may be others for your specific organization.
- Expired leases, mortgages, and contracts upon expiration
- Accounts payable and receivable ledgers
- Vendor bills and customer invoices
- Sales records and journals
- Bank statements and deposit slips
- Bank reconciliations
- Donor Information
- Personnel records of former employees
Items To Keep for 3 to 5 Years
There may be reasons to keep these documents longer for legal purposes or historical accounting purposes.
- Employment applications
- Volunteer records
- Purchase orders
- Miscellaneous correspondence and internal reports
- Timesheets and payroll (4 years)
Sometimes your state, local, and industry regulations will have additional—and possibly contradictory—retention requirements than those suggested above. You should always double-check with respective authorities to determine what is most appropriate for your organization.
As for tax returns and audited financial statements, understand that your CPA firm will probably not retain copies of your returns beyond a certain period, typically 7 to 8 years. All original workpapers are typically returned to the client at the conclusion of the tax season. It is the responsibility of the taxpayer (in this instance, the nonprofit organization) to retain all tax documents and work files in the event they are requested by the IRS.
Additional References:
California Nonprofit Governance
https://calnonprofits.org/policy-framework-and-current-priorities/
California Document Retention Policy Template Example
https://publiccounsel.org/wp-content/uploads/2025/09/Annotated-Form-of-Records-Management-and-Retention-Policy.pdf
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