DOCUMENT RETENTION AND DESTRUCTION
(based on National Center for Nonprofit Associations policy)

NPC shall retain records for the period of their immediate or current use, unless longer retention is necessary for historical reference or to comply with contractual or legal requirements. Records and documents outlined in this policy includes paper, electronic files (including e-mail) and voicemail records regardless of where the document is stored, including network servers, desktop or laptop computers and handheld computers and other wireless devices with text messaging capabilities.

In accordance with 18 U.S.C. Section 1519 and the Sarbanes Oxley Act, an NPC shall not knowingly destroy a document with the intent to obstruct or influence an “investigation or proper administration of any matter within the jurisdiction of any department agency of the United States . . . or in relation to or contemplation of such matter or case." If an official investigation is underway or even suspected, document purging must stop in order to avoid criminal obstruction.

In order to eliminate accidental or innocent destruction, NPC has the following document retention requirements: (Insert policy customized for NPC).

The following table provides sample minimum requirements. NPCs are encouraged to investigate individual state requirements and consult their accountants for guidance (NPCs serving multi-state/jurisdictional VAMCs must investigate all corresponding requirements).

Items to discuss when developing a records retention policy:

Why does a nonprofit need a records retention policy and schedule?

1. Nonprofits are required by various state and federal laws and regulations to retain specific records for varying amounts of time.

2. There are costs associated with keeping records.

For example:

• Cost of additional file cabinets or off-site storage rental.
• Additional staff time locating information in overflowing file cabinets, and handling inactive files on a day-to-day basis.
• Any records the nonprofit still possesses can be subpoenaed or audited. (Errors can be “cleansed” as records are systematically purged. NB: Make sure any records relating to any ongoing legal dispute or lawsuit are not purged. Purging of documents with the intent to destroy proof of wrongdoing, even documents scheduled to be purged, is illegal.

3. There are costs associated with not keeping records.

For example

• Cost of staff time redoing something that should have been retained
• Risk of fines for not complying with laws and regulations.

4. A very obvious one: Nonprofits need records for daily operations. However, most records have a limited useful life.

5. Defense in legal disputes. The nonprofit may need records to prove its position in court.

6. Proof the nonprofit is in compliance with various laws and regulations.

Nonprofits can be audited by:

• Internal Revenue Service
• Inspector General
• Department of Labor
• Various State Entities

An audit by any of these will require the nonprofit to produce records for review.

• What records are currently in storage?
• What records are currently in the nonprofits daily operating space?
• What are the space restraints?
• How old are the various records?
• What is the usefulness of existing records?

For example:

• The file on the search for a fax machine last year that was not purchased - Probably of no use.
• Last Year’s A/P files - Useful for a certain amount of time.
• Board Minutes - Of historical significance.

• What records have permanent historical value for the nonprofit?
• What electronic records exist? How can the nonprofit capture records that need to be retained?
• What records need to be available on a day-to-day basis?
• How will the records be disposed of without compromising security and confidentiality?
• What federal laws and regulations apply to the nonprofit records?
• What state laws regarding records apply to the nonprofit? Remember; often state laws are more stringent than federal law.
• Who will have authority over this policy?
• Who will be responsible for compliance with the policy?

1. Take an inventory of records.

2. Review the types and value of current records.

• Administrative value - Use in the day-to-day operations.
• Legal value - Records that must be maintained to comply with or show compliance with laws and regulations.
• Historical value - Records that show the history of the nonprofit, such as the bylaws.

3. Review the applicable federal and state laws and regulations for each type of records.

4. Develop a records retention policy and/or schedule.

5. Apply the new schedule to the current nonprofit records.

6. Continue to apply the retention schedule to archive and dispose of records at least annually.

7. Review records retention policy/schedule periodically for compliance with new or revised laws and regulations.

• Some records that may be purged may be filed with records that need to be retained. You may want to retain the whole file; in this case the benefit of purging the records may not outweigh the time it takes to do the purge.
• When storing boxes put a “destroy after” date on the box so the records need not be reviewed each time.
• Some records are so important that originals or copies should be kept offsite. What records would the nonprofit need to keep running after an emergency? What records are irreplaceable?
• Putting a date on the label of an inactive file can make purging simple.
• Have a Purge Day. Set aside a day for the whole office to review, organize, toss and archive files.

In negotiating CRAs for the nonprofit remember records retention cost the nonprofit time and money. Also, many sponsors include language that is vague as to the actual length of time study records need to be held.

Some suggested language to add to a CRA:

Notwithstanding the foregoing, beginning five (5) years after the completion or termination of the Project, Institution may notify Sponsor of its desire to transfer the data to Sponsor, at Sponsor’s expense, for retention by Sponsor. Following such notice, Institution shall transfer such data to Sponsor in a manner to be mutually agreed.

OR

Notwithstanding the foregoing, beginning five years after completion or termination of the project, Institution may notify Sponsor of its desire to transfer the data to Sponsor, at Sponsor's expense, for retention by Sponsor. Alternatively, if records are to be retained for longer than 5 years after termination or completion, if any additional storage costs, such costs will be borne by the Sponsor.

Example:  Seattle Records Retention Schedule
Example:  Records Retention Worksheet

Helpful Links

This is a quick sample of some of the resources out on the web.  There is more; for example, most universities have a records retention policy published on the web.

http://www.washington.edu/admin/recmgt/uw.gs7.html  University of Washington’s very extensive records retention policy for grants and contracts.

http://grants.nih.gov/grants/policy/nihgps_2001/part_iia_7.htm  NIH Grants Policy Statement (03/01) Part II: Terms and Conditions of NIH Grant Awards Subpart A: General -- Part 7 of 7.  This section covers among other things record retention for NIH Grants.

http://www.securityarchives.com/guide.htm#CONTRACT%20ADMINISTRATION 

http://www.bankersbox.com/retention/Record_Retention.doc Both of these websites have suggested records retention guidelines.  Remember these sites are hosted by records management companies, which may influence the recommendations.

http://www.wmdco.com/general/recordretention.html  Guidelines developed by Watkins, Meegan, Drury & Company, L.L.C. (WMD&Co.), a certified public accounting firm.

http://www.g-web.net/howard/record.html  Guidelines developed by DeLoach, Mann, & Poarch P.C. another certified public accounting firm.

http://www.delawarenonprofit.org/FinMgmntFaq2.html  Guidelines for minimum length of records retention put together by the Delaware Association of Nonprofit Agencies.  There is a lot of good information on this site regarding a variety of issues for nonprofits.

http://www.lawvantage.com/19800001.shtml  More federal law and retention recommendations from Lawvantage a site for downloading complex agreements, standard contracts and other legal documents, developed for lawyers.

http://www.shrm.org/hrresources/whitepapers_published/CMS_000270.asp  Federal law record retention requirements for employers on the Society for Human Resource Management website.  You must be a member to get to this information.

http://www.aiim.org/documents/wp/RecordsManagementRed.pdf  White paper on the importance of records management.

http://www.irch.com/recreq_info_frame.htm  Information Requirements Clearinghouse
A company which specializes in records retention and legal requirements for records and information management programs.  You can buy a book on records retention requirements for federal and state laws at this site.

http://www.langancpa.com/resources/Record%20Retention.doc  Records retention schedule prepared by Langan Associates, P.C. 

http://www.vscpa.com For the Virginia Society of CPA's record retention schedule, please type "records retention" in the "search" box in the upper right hand corner on the screen.

Rose Hawley, PHR
Human Resources Manager
1660 S Columbian Way, S-151F
Seattle WA 98108
(206) 764-2929
rose@sibcr.org

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last updated: 01/04/10

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