This post originally appeared here. Thank you to Brotherhood Mutual for letting us share with our audience.
Know what to keep; for how long
Most of us are working with paper and electronic files that are too large to easily find specific information when we need it. What should we keep? What should we discard?
Churches and ministries are really not much different from other organizations when it comes to the need for proper recordkeeping. You may not have to retain every record that crosses your desk, but before you decide to toss anything, determine what you need to keep and why. Then create an orderly way to file and maintain the records you keep so they’re easy to find when you need them.
The reasons for retaining records within a ministry organization are similar to other organizations. A good record-retention systems allows you to:
- Respond to current questions based on past decisions (such as the process for electing new leadership team members).
- Document past transactions (such as which suppliers were paid in a certain month).
- Document past events (such as who was supervising a teen trip last fall, or details regarding an employee disciplinary action).
Documents to Keep
To fulfill these needs, consider retaining the following categories of records. Refer to the records checklist below for a more specific records you should consider retaining.
Organizational Documents like Articles of Incorporation, Bylaws, and meeting minutes should be retained both for their historical value and for their legal value in officially describing the organization’s identity, processes, and core functions.
Financial Records should be retained for their tax purposes as well as for legal documentation related to proper handling of organizational resources.
Employment Records should be retained to demonstrate compliance with employment laws as well as to demonstrate reasonable employment practices.
Ministry Operations Records may also need to be kept for a period of time. Documentation of worker screening procedures will be critical in the defense of the church if a child or youth volunteer is accused of sexual misconduct, or a security team member is accused of excessive force. Incident and accident reports capture factual details that may prove important in later claims settlements or a lawsuit against the ministry. Retaining signed copies of activity participation agreements or special medical needs documentation will help to show what the church actually knew and what risks the individual agreed to accept at the time of an injury or medical incident. Records of facility maintenance help demonstrate reasonable care of the facilities.
Hard Copy vs. Electronic Retention
It’s not necessary to dedicate large amounts of storage space to stacks of paper. Digital storage is now the preferred method of record retention, particularly because digital records are much more likely to survive a disaster. In addition, you will generally take less time to search electronic records than paper files, and sending digital records is quicker and less expensive than copying and mailing hard copy records. Typically, courts also now allow digital images to be submitted as evidence in legal proceedings, thus eliminating the need for hard copy documents in court.
Digital storage provides a variety of options for retaining important records. Paper records can be scanned into digital images for storage before being destroyed. Digital computer files can be transferred into digital documents for storage purposes. Such records can be stored on a computer hard drive, a CD storage disk, or on a network server either at your location or through the Internet.
Choosing the storage option that makes the most sense to your organization will depend on your ministry’s needs. Consult with a vendor who’s familiar with document imaging and storage technology and discuss the best way to index records for search and retrieval. Also, keep records security in mind—data loss can be devastating. Finally, ask your ministry’s attorney for guidance on creating an electronic record retention program that complies with local legal requirements.
How Long Should Records Be Kept?
Once a records-retention process is put in place, how long should you retain these records? This is a simple question without a simple answer.
Historically Significant Records should be kept indefinitely. All versions of the Articles of Incorporation, bylaws, and key meeting minutes should be preserved to maintain the organization’s history. Copies of expired insurance policies are also good to have in a permanent file in order to preserve the record regarding what coverages were provided by which carriers at any given point in time.
Financial Records are traditionally kept for seven years. This relates to the laws of tax audits and the number of years back the IRS is allowed to look when determining an organization’s tax liability. Most organizations simply make the seven-year-rule standard for all records containing financial information since any financial document may potentially be required during a tax audit.
Employment Records should be kept while the employee remains employed and for seven years after the individual leaves employment. Employee benefit records may require an even longer retention period. This is necessary for documentation purposes in case the employee has questions about his or her status, benefits, compensation, etc., or an employment-related claim is made against the ministry.
For Operational Records, the desired period of retention will depend on the statute of limitations for any legal action that might be related to the records in question. For churches and other organizations that minister to youth, this becomes more complicated because the statute of limitations applies differently to minors than it does to adults. This means that a state’s four-year limitation period may not begin to count down until the minor’s 18th birthday. In sexual misconduct cases, some state legislatures have passed special laws allowing allegations dating back 30 years or more regardless of the statute of limitations. For this reason, it’s important to involve an attorney in setting record retention periods for operational records.
If approved by your attorney, one approach to consider that’s uniform and easy to administer would be to implement a standard 10-year records retention policy that uses digital records storage. This 10-year retention period would be for all records other than historically significant records such as deeds, bylaws, insurance policies (which should be retained indefinitely), and employee records (which should be kept until seven years after the employee leaves).
Ministries that choose to keep paper records on hand after they’re imaged can keep these hard copy records for one or two years after imaging and then shred them. Organizations should also carefully consider maintaining back-up systems or off-site digital storage to prevent the total loss of important records in case of a catastrophe.
Records Checklist
Consider the following list of records as you determine what you will need to retain to maintain effective ministry documentation. Consult with an attorney in your area for advice about the records state and local laws and regulators require.
Organizational Records
- Articles of Incorporation
- Bylaws
- Board Meeting Minutes
- Congregation Meeting Minutes
- Budgets
- Insurance Policies
- Contracts
Financial Records
- Bank Statements
- Tax Documents
- Expense Records
- Payroll Records
Employment Records
- Completed Employee Applications
- Record of Reference Checks Performed
- Criminal Background Check Results
- Notes from Employee Interview
- Completed Performance Appraisals
- Compensation Documentation
- Exit Interview Documentation
Operational Records
- Evidence of Worker Screening Procedures
- Completed Worker Application
- Annual Renewal Applications
- Record of Reference Checks Performed
- Criminal Background Check Results
- Notes from Worker Interview
- Volunteer Rosters
- Incident/Accident Reports
- Signed Activity Participation Agreements
- Special Medical Needs Forms
- Facility Maintenance Records
