By Jerry Dilk
Whether your church is small and intimate or serves thousands, there’s a lot that goes into managing a place of worship. One thing that is often overlooked — especially by those with smaller congregations — is document protection.
Securing your documents is pivotal because it protects financial records, employee information, and ensures legal compliance. Churches often underestimate the importance of document security, sometimes believing that theft or accountability issues won’t affect them. However, billions of dollars are lost globally because of church embezzlement. In fact, approximately 1 in 10 U.S. churches reports embezzled funds every year. Additionally, if the IRS comes knocking looking to verify payroll taxes, you want the ability to easily provide that information.
In several ways, churches operate similarly to a business. They have to keep track of donation records, constitutions, bylaws, historical documents, sensitive employee information, and provide proper tax reports to the IRS. While it might be a bit time-consuming, properly storing documents is easy and can save a lot of pain and possibly legal issues in the long run.
If your church is a registered 501(c)(3), there’s a variety of paperwork that needs to be managed. These documents include financial records, legal status, and personnel information to ensure compliance and demonstrate the church’s legal standing and historical integrity. Key documents include organizational records such as bylaws and tax exemption letters, property records, insurance policies, financial records, personnel and volunteer records, and compliance and operational records.
It’s important to research any IRS, state, or federal retention guidelines regarding how long certain documents should be kept. Sort records into temporary, semi-permanent, and permanent. Historical documents, such as bylaws and minutes, are permanent. Most financial records, such as payroll and contributions, have a seven-year retention period. Shred all documents that are no longer needed to save storage space and avoid fines.
Smaller churches can handle records very casually in a locked file cabinet. To best organize your documents, first gather and inventory the records. An inventory is pivotal as it will give you an idea of what documents you have and where they’re stored. Then, establish a consistent, logical filing system. Filing by ministry, subject, department, or chronologically are all effective examples. Again, make sure you note which documents are permanent and semi-permanent. These usually fall under similar categories, so it shouldn’t add too much time when sorting.
Consider also using a digital filing system. It’s a good idea to digitally keep any documents that can be modified, like engineering drawings and business plans. It’s also beneficial to digitize bylaws and meeting minutes. This helps prevent the need to dig through files when a specific document needs to be reviewed.
Develop a retrieval process for records and establish a standardized procedure. Make sure access to sensitive information is locked up and very limited. While everyone should be aware of the protocol for retrieving documents, volunteers should not be given access to sensitive information. Granting this access to people outside of church leadership significantly increases the risk of fraud.
Larger churches often need to manage additional documents such as event registration forms, mission trip records, facility use agreements, and membership information. Some also oversee operations like hospitals and schools. If your facility lacks adequate storage space or is responsible for handling a high volume of sensitive information, such as school or hospital records, it’s wise to store them at an off-site location and keep a digitized copy of all documents. This approach ensures easy access and enhanced protection for important documents.
If this is not an option, designate a couple of administrative employees to handle and track documents. This will keep things organized and prevent unwanted hands from getting on the documents.
Lastly, invest in a fireproof locked safe to keep on-site. Keep any valuable historical documents that you wouldn’t want to go up in flames.
Yes, sorting and organizing documents can be time-consuming. However, it’s essential to understand that churches must follow laws and regulations similar to those of businesses. You can be subject to fraud or fines if you aren’t careful about handling your documents. Taking the time to sort through them will save you a lot of time and reduce financial risks in the long run.
Jerry Dilk is the Senior Consultant of Information Governance at Data Storage Centers in Phoenix. Data Storage Centers are experts in the storage and organization of physical media and sensitive records for churches and businesses.
