How long should nonprofit organizations retain business-related records?
According to part VI, section B, question 14 of the IRS Form 990 instructions, " document retention and destruction policy identifies the record retention responsibilities of staff, volunteers, board members, and outsiders for maintaining and documenting the storage and destruction of the organization's documents and records." Page twenty-one of the IRS' Compliance Guide for Charities gives greater clarity about how long records should be kept.
Although retention periods vary for different types of records or documents, nonprofit organizations should have a written, mandatory policy for document retention and destruction policies. All staff should be familiar with these policies so they can keep appropriate records and not destroy any unwittingly.
Section VI, lines 13 and 14 of the IRS 990 Instruction form provides additional insight on imposing criminal liability if nonprofits attempt to destroy records pertinent to a federal investigation. In other words, no cover-ups allowed!
"Certain federal or state laws provide protection against whistleblower retaliation and prohibit destruction of certain documents. For instance, while the federal Sarbanes-Oxley legislation generally does not pertain to tax-exempt organizations, it does impose criminal liability on tax-exempt as well as other organizations for (1) retaliation against whistleblowers that report federal offenses, and (2) for destruction of records with the intent to obstruct a federal investigation."
The periods suggested in the resources below are intended as general guidelines only. You are advised to seek legal counsel regarding your own document retention policies. You can also conduct an internet search for "state of (enter your state) document retention policy" to get specific recommendations for your state.
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National Council of Nonprofits
Document Retention Policies
Provides information from the IRS and external links.
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Blue Avocado
Model Document Retention Policy for Nonprofits
This document management policy is designed to conform with the charitable laws of states. Provides specific guidelines for every type of document. Outlines documents and retention schedules.