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Nonprofit dissolution — required records to archive?
I’m assisting a nonprofit child care center with its dissolution. One thorny situation left unresolved by legal and accounting counsel is what specific records must be kept in long-term storage and eventually destroyed? Most advice I’ve received so far says to “play it safe” and keep everything from the past seven years of operation. With all the individual parent and student files and operational reports on top of governance and financial statements, etc., the total weight of records is significant. Multiple levels of storage boxes are stacked on a pallet, plus there’s a four-drawer filing cabinet and a laptop computer.
Further complicating the storage/destruction issue is that there is no vendor in my part of the world offering this service. [There were two vendors in my town eight years ago (when I last assisted in the dissolution of a nonprofit); both have stopped offering the service.]
I want to follow the law on behalf of my client, of course! My challenge is that I need to do so in an economical way in terms of access to a service, cost, and volume of records.
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4 Replies
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Michael: I’ve kept one eye on the nonprofit dissolution question the last couple decades, but I can’t say I’ve seen clear legal guidance on what must be kept. The National Council on Nonprofit keeps a pretty nice summary of general considerations (https://www.councilofnonprofits.org/running-nonprofit/governance-leadership/dissolving-nonprofit-corporation), but there’s nothing in particular there about how long records must be kept. I’d guess there might be general guidance relating to corporations that could vary from state to state.
If you were in the big city, I’d suggest hiring a vendor that would scan all those documents down into a thumb drive. I don’t know if that’s an option where you are —
Mark
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Mark:
Thanks! I hadn’t considered digitizing the records. If successful, I could store the electronic files and one remaining agency laptop myself. I’d probably need to get guidance from the state AG’s office on whether electronic copies are sufficient to meet retention requirements.
There are no local vendors who provide long-term records retention services culminating in destruction. My consulting partner thinks this means there’s a business opportunity for us, but I’m not so sure.
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Hi Michael and Mark…I have been through this – twice! – and we followed the same retention periods that were in place when the organization was in operation, maxing out at 7 years. I was surprised by how often we did need to access records in the years following dissolution. In regards to storage, that was the hard part and we were able to rely on Board members to keep things (these were smaller organizations) but it may make sense to determine if there are funds available for a storage facility or, even better, (Mark!) get things digitized.
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Wade:
I’m surprised you’d need access after dissolution. I chaired a nonprofit board that dissolved nine years ago, and I dropped off the records for long-term storage and eventual destruction (this vendor no longer provides the service!). I was never contacted to access records, even though it was a statewide organization with all Federal funding.
Thanks!
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