When Aretha Franklin died in 2018, she left multiple wills bequeathing different amounts to the people and organizations she cared about. One document dated back to 2010 and was in a locked cabinet in her house, while a newer document from 2014 was found in a spiral bound notebook in her couch cushions. The wills were so sufficiently different, that Aretha Franklin’s heirs went to court to settle a dispute about which document to follow.

When Aretha Franklin died in 2018, she left multiple wills bequeathing different amounts to the people and organizations she cared about. One document dated back to 2010 and was in a locked cabinet in her house, while a newer document from 2014 was found in a spiral bound notebook in her couch cushions. The wills were so sufficiently different, that Aretha Franklin’s heirs went to court to settle a dispute about which document to follow.

Earlier this year, five years after her death, a judge ruled that the court would only recognize the will written in a notebook tucked inside her couc. Presumably, the beneficiaries of her estate have waited five years for this decision and are only now able to receive their inheritance. 

I think we can all agree that a couch cushion is no place to store your will. On my death bed, I don’t want to grip my husband’s hand to utter my final words on this planet, “Thank you for a wonderful life my love and don’t forget to check the couch cushions for my most recent will.” 

As an interim executive director, I’ve walked into many organizations that treat their organization’s most important documents the same way Aretha Franklin filed her wills. Imagine your organization being unable to move forward for half-a-decade while waiting for a judge to review and decide which documents would guide a decision? 

hy a robust document retention strategy is essential to the long-term health and stability of your nonprofit. But if you don’t have a retention policy (or at least not a very thorough one), have no fear! Below I have outlined the crucial documents your leadership needs to always maintain and transfer as part of any leadership transition along with storage best practices.

Your Document Check-List

IRS Form 1023 

Your 1023 [https://www.irs.gov/forms-pubs/about-form-1023] is the form your organization submitted to the IRS to receive Federal recognition as a 501(c)(3) tax exempt nonprofit. Unlike your 990 tax forms, your 1023 is not publicly available at the IRS website (especially for older organizations). 

You might be wondering why you might ever need your Form 1023 once you are officially recognized as a nonprofit. Well, there are times when the IRS or another federal, state, or local government entity will require a copy of your IRS Form 1023 and you’ll want to have it handy.

When I was the executive director of the William Way Community Center in Philadelphia, a computer error removed us from the IRS’ list of exempt nonprofit organizations. We had submitted all our tax and regulatory filings in a timely manner, but a hiccup within the IRS’ ancient computer system caused our name and EIN to disappear from the roll of recognized nonprofits. 

We learned about this error when a funder informed us that we couldn’t receive a grant payment until we reappeared on the exempt list. After several calls to the IRS and eventually engaging an attorney to assist us, the IRS acknowledged that we were on the list at one point and offered to return us to the list within 60 days of receiving a copy of the completed IRS Form 1023 — that we had originally submitted in the early 1970s!  

The organization had lost that form decades earlier, so we asked if the simple IRS 501(c)(3) exemption letter would be sufficient. The IRS replied with a firm, “No. We need your IRS Form 1023. You can order it from another branch of the Internal Revenue Service.” Which resulted in an additional 3 month wait. 

In the Kafkaesque world that is the U.S. Department of Treasury, we submitted a request to the IRS for a copy of our Form 1023 from the 1970s so that we could mail that same form back to the IRS! And, yes, we asked our Congressional representative and a U.S. Senator to intervene — and their efforts were fruitless as well. Nothing could speed to process. 

We did eventually resolve the situation, and our organization’s name was returned to the Exempt Organization list. But all grant funding ceased for almost 8 months while we resolved the issue (thankfully, we had a healthy reserve fund — this would have sunk other nonprofits). 

Articles of Incorporation

Your nonprofit filed this document when incorporating the nonprofit in your home state.  Financial institutions and other government entities may occasionally ask for your articles of incorporation. While these are often available at your Secretary of State’s website, having your own certified is essential if the state’s system has issues. 

By-Laws

Your organization’s by-laws outline the rules that govern your organization. They determine how long a Board member can serve, the structure your Board will have, the role of staff, and much more. While they can be easily changed (often with just one or two Board votes), the legal Duty of Obedience requires that your Board members ensure the Board as a whole and your nonprofit always follow your by-laws. 

While your nonprofit’s by-laws are important every day, being compliant with your most recent amended by-laws is critically important when there is a significant governance, legal, or staff leadership issue. In fact, when state Attorneys General seek to dissolve an organization or take action against the Board and executive staff, they almost always cite failing to follow your by-laws. This press release from The Michigan Attorney General’s Office is a good example.

Board Minutes and Corporate Resolutions 

Your nonprofit’s Board minutes and corporate resolutions are crucial documents that record the decisions, actions, and discussions that occur during Board meetings. These important documents help prove whether Board members are fulfilling their three legal duties of care, loyalty, and obedience: 

• • • • • Care: Your minutes demonstrate Board members’ duty of care by documenting Board member meeting attendance, the occurrence of regular financial updates, the Executive Director’s evaluation, etc. 
        • Loyalty: Board minutes will note that conflicts of interest have been disclosed, discussed, and addressed. They will also provide a record of how each Board member votes, further documenting that Board members were loyal to the organization. 
        • Obedience: Finally, your Board’s minutes document that your Board adhered to the bylaws and asked the questions necessary to ensure compliance with local, state, and federal law. 

Audits and Tax Filings

While many experts suggest only retaining audit and tax filings for 7 to 10 years, I  believe in keeping them indefinitely because these tax documents provide accurate historical information for future generations. This includes detailed financial information as well as important program and governance information. 

In fact, we have used tax forms as an invaluable resource to quickly analyze 5 or even 10 years of organizational data during our strategic planning and Board development engagements.

Real Estate Deeds, Mortgages, and Bills of Sale for Large purchases

Regardless of how long an expert recommends I retain deeds, mortgages, mortgage pay off notices, and large purchase documentation, I typically retain these “for life.”  Since banks sometimes make mistakes and county property registration offices also occasionally make errors, I always want to proof of these transactions. 

Best Practices for Document Retention

✓ Three positions should be assigned to maintain paper copies of each document.  The By-laws, for example, might be maintained by the Board Chair, Secretary, and CEO while the tax filings might be maintained by the Board Treasurer, CEO, and CFO. 

✓ Develop and implement a standardized system for transferring the paper documents during leadership transitions.

✓ Each document should also be maintained in a secure, electronic format with each assigned person having access to the electronically stored file.

✓ Documents that can be amended, such as by-laws or articles of incorporation, should be clearly marked with a filing date. And any outdated documents should be indelibly marked (or watermarked if digital) with the date they were replaced by an amended document. 

The chart below can help you plan for the appropriate maintenance, retention, and transfer of your core documents:

Document Name	Three Positions Assigned	Electronic Storage Method	Transfer plan
Amended-Bylaws
Articles of Incorporation
By-Laws
Board Minutes
Audits and Tax Filings
Deeds, Mortgages, and Bills of Sale

While this short blog post doesn’t replace a robust document retention and destruction policy, I’ve written it with the hope that you will take some time today to ensure you’ve safely stored your nonprofit’s most important documents and ensured there’s a plan to transfer them during your next leadership transition.