If you are like most church treasurers, you probably have asked yourself a hundred times, “How long should we keep church records?” It is a legitimate question. After all, church offices can become overwhelmed with old records and forms. Unfortunately, there are no easy answers.
This article is the first in a series of articles in Church Treasurer Alert! that will summarize recordkeeping rules for several kinds of church records. This article will address the retention of corporate records. Future articles will address retention rules for several other kinds of records including tax, employment, insurance, correspondence, contracts, property, financial, vehicles, members, investments, and legal.
Churches approach recordkeeping in a number of ways. Some retain records “forever” just in case they may be needed even though most records have not been looked at in years. Others react to growing piles of clutter by going on occasional “search and destroy” missions. Some churches have adopted the rule that “if it hasn’t been touched in one year, then throw it out.”
None of these rules is either appropriate or desirable. It is possible to keep some records too long—well beyond what is required by law. In some cases this can result in the retention of records that might be harmful in future litigation. On the other hand, disposing of records too soon can lead to unanticipated problems—both with various state and federal government agencies and in future lawsuits.
What is needed is a records retention policy based on applicable legal considerations and your church’s needs that will make records retention and disposal decisions systematic and rational. The “guesswork” and arbitrary nature of record retention decisions must be replaced with a sound and consistent policy. The table reproduced in this newsletter will assist you in developing such a policy with regard to corporate records.
Tip. You can use the chart as a quick glossary of commonly used terms.
Tip. In establishing a records retention policy you should consider a number of factors in addition to how long to keep records. These include: (1) when to make copies of records; (2) maintaining the security of records (especially records you plan to keep permanently), including backups of computer records; and (3) developing a record retention schedule (a document that summarizes records, lists how long you plan to keep them, and indicates where they are kept).
Here are some additional factors to consider in developing a records retention policy for your church:
- Make an inventory of existing records.
- The church board should develop and approve your records retention policy.
- Your records retention policy should be reviewed by a local attorney (who can check local and state requirements), a CPA, and your insurance agent.
- There are many reasons to keep church records. These include legal requirements, potential relevance in future litigation, the needs of the organization, and historical importance. The table reproduced in this article suggests minimum periods of time for retaining various church records. Some of the suggested retention periods are based on legal requirements, while others are based on practical considerations. You may want to keep some records longer than the table suggests.
- Some organizations maintain a “destruction of records journal”. When the period of time for keeping a record has expired, the record is described in the journal before being destroyed.
- Do not destroy records, even when the period for keeping them has expired, if they may be relevant in pending or threatened litigation or in pending or threatened government (including IRS) investigations.
Record Retention Guidelines for
|charter (articles of incorporation)||a legal document usually issued by the Secretary of State confirming corporate status||permanently||• the “charter” is the articles of incorporation that have been approved by the Secretary of State
• contains basic information such as name, address, the initial board members, duration, and purpose
• append all amendments to the charter
|constitutions or bylaws||rules of internal church governance||permanently||be sure the current version is distinguishable from obsolete versions (i.e., affix an effective date to all copies)|
|certificate of incorporation||a legal document issued by the Secretary of State confirming incorporation||permanently||a corporation’s “birth certificate”|
|certificate of good standing||a legal document issued by the Secretary of State confirming current corporate status||permanently||it is a good practice to obtain one annually to validate corporate status|
|minutes of membership meetings||summaries of actions taken at regular and special membership meetings||permanently||minutes contain important information on many issues of church governance|
|minutes of board meetings||summaries of actions taken at regular and special board meetings||permanently||minutes contain important information on many issues of church governance|
|annual corporate reports||an annual report that in many states must be filed annually with the Secretary of State by any corporation incorporated under the general nonprofit corporation law||permanently||• failure to file this report can result in a “lapse” of corporation status
• obtaining an annual certificate of good standing ensures that the corporate status has not lapsed
This article first appeared in Church Treasurer Alert, March 2004.