Proper recordkeeping is essential for efficient foundation operations, legal compliance, and smooth audits. An organized system ensures easy access to critical documents, reduces clutter, and protects your foundation’s history. Although maintaining records might seem like a time-consuming task, investing thought and effort into a clear and practical system will save time and prevent headaches in the long run. To help you get started, here’s a guide to organizing your foundation’s records, transitioning to digital storage, and understanding what to keep and for how long.
General Foundation Recordkeeping Tips
- Retention Periods: Keep most significant foundation files for at least 3 years.
- Transition to Digital: To save space, consider digitizing paper files. Before discarding physical copies, ensure you have at least two electronic backups. If this task is time-consuming, outsourcing might be the best option.
- Organized Filing System: Use separate, clearly labeled files for each type of document to simplify filing, access, and storage.
- Online Storage: Accept and store letters of inquiry, proposals, and other documents online. Ensure regular backups to prevent data loss.
- Annual Maintenance: At the start of each year, move older files to storage and create new ones. Example: Collect 2024 declined proposals, place them in a box labeled “Declined 2024 Proposals – Dispose January 2027.”
- Minimize Clutter: Retain only necessary documents. For example, discard unrequested attachments from grant proposals.
What Documents to Keep (and for How Long)
Below is a list of the length of time you must keep each type of record by the main areas of foundation operations.
Founding Papers and Legal Documents
Most important, keep originals of these documents in a secured, fireproof location off-site. In addition, keep copies in your office:
- All legal documents (permanently)
- Amendments to your articles of incorporation (permanently)
- Charter documents (permanently)
- State sales tax exemption rulings (permanently)
Accounting Records
- Accounting records, especially bank statements and reconciliations, checks, budget and expense reports, check requests and invoices, depreciation schedules, general ledger, general journal, board honorarium reports, investment reports, payroll taxes, and security brokerage slips (7 years)
- Bank deposit slips and interim financial statements (3 years)
- Paychecks (3 years)
- Tax returns with attachments (permanently)
- Tax worksheets (10 years)
Board Records
- Board code of conduct (3 years)
- Financial policies (permanently)
- Board meeting minutes (permanently)
Grantmaking Records
- General grant correspondence, such as letters of inquiry and grant applications—even ones that were denied (3 years)
- Grant records, particularly an annual financial record of grants, contributions correspondence, grantee Internal Revenue Service determination letters and verification, and matching gift records (7 years)
- Grant reports (permanently)
Employment, Office Administration, and Insurance Records
- All insurance policy confirmations from insurance agent and auto insurance papers (3 years)
- Benefits and salary information (permanently)
- Contracts, leases, and mortgages (7 years)
- Employment policies (permanently)
- Employment records, especially applications, personnel files, time reports, unemployment claims, withholding exemptions, workers’ compensation reports, and W-2 forms (7 years)
- General correspondence (3 years)
- Insurance policies, such as business owners’ package, crime coverage, coverage for directors and officers, pension plan and fiduciary liability, and umbrella coverage (10 years)
- Real estate records: Ten years
- Workers’ compensation insurance policies (7 years)
Further Resources for Effective Foundation Management
For more in-depth guidance on managing your foundation, explore these resources:
- Keeping Good Records: Small Foundations’ Guide to Staying Organized – A detailed primer on recordkeeping strategies tailored for foundations with lean operations.
- Foundations 101: Introduction to Philanthropy and Foundation Administration – A virtual seminar designed to help you get started with foundation essentials and administration best practices.
- The Foundation Guidebook – A comprehensive resource for lean foundations, providing essential tools and insights for effective administration and philanthropy.