Most people think of document management as time-wasting, purely administrative, thoughtless work. However, effective document management can mean the difference between success and failure for a nonprofit, and must therefore be the result of a thoughtful, strategic effort on behalf of the entire firm—not just those who personally handle documents as part of their daily duties.
Today our guest blogger Alisa Jno-Charles, co-founder of Papertrailer talks about why your nonprofit should care about good document management.
What is good document management?
To understand why document management is so vital, we first need to clarify what good document
So what does it mean to manage documents well? It means both of the following must be true:
1. Having all the records necessary for running and preserving your business, and
2. Being able to easily find those records at will.
Why must both be true? If you have all possible documentation but can never find anything when you’re
looking for it, or if you have a top-notch document organization system but it doesn’t contain everything
you need and work with, can you really say you have a good handle on your company’s documentation?
What are the benefits of good document management?
One of the primary benefits of keeping thorough and accurate records is your organization’s ability to
take proactive action to preserve and grow your business, and, as a result, increase the impact your
nonprofit can have. Additionally, it allows you to defend your actions and your firm to internal and
So, good document management allows you to:
- Back up your claims. It’s all about evidence. If, for instance, a vendor claims you didn’t pay him,
your supervisor says you didn’t turn something in on time, a donor says they gave more than
they did, or the state government says your firm didn’t pay its taxes, keeping accurate records
will allow you to settle these disputes.
- Analyze your business and its initiatives. Many nonprofits say they spend lots of time and
money on programming, but very few know the impact they have. Keeping good event
attendance records along with the budget for each event, for instance, allows you to analyze
what is working and what isn’t. Alternatively, the data you keep can help on the operational side
as well. Keeping a record of the tenure of volunteers and employees can highlight problems with
retention and morale.
- Revisit terms and agreements to ensure compliance and identify inefficiencies. If you keep
your contracts and terms of service agreements, you can look up terms on which you can
terminate an agreement if you’re dissatisfied with the results of the vendor. Keeping good
donor records allows you to assess who you should focus your follow-on fundraising efforts on,
given state and federal limits.
What are the implications of bad document management?
In fact, not managing your documentation well has potentially massive repercussions.
- Inability to defend yourself against complaints, litigation or sanctions. Maybe you have a
disgruntled former employee, a program recipient that feels wronged, or a landlord that wants
to terminate your lease. If you do not have the necessary evidence handy to provide your lawyer
or arbitrator, it doesn’t matter whether the law is on your side or not. It’s all about what you can
prove. If you can’t prove it, you could lose money, licenses and worse.
- Inability to support your numbers in case of an audit. The rule of thumb is that you need to
keep evidence for every number that appears on your tax returns—state and federal. The
government can audit you any time, at random, and expects you to provide at least 3 years of
back records for every number. Your inability to do so results in penalties and charges and
- Failure to prove compliance with regulatory agencies. You may get a notice from a license-
granting government body that claims you violated regulations. Your inability to provide
evidence of compliance may result in loss of critical licenses that prevent you from delivering on
- Potential loss of non-profit status. Inability to provide sufficient evidence of your nonprofit
nature and activities can result in the government revoking your nonprofit status.
So, as you can see, establishing and maintaining good document management systems is extremely
important for the preservation and well-being of a nonprofit. For that reason, it’s important to take the
time, effort and some funding in order to establish to ensure that your organization has the systems and
support processes in place to keep all relevant documentation and be able to retrieve it when it is
Alisa Jno-Charles is the co-founder of Papertrailer, which specializes in document
management consulting and software tailored for small businesses. Alisa holds a Bachelor’s Degree in
Finance and an MBA. She also teaches entrepreneurship at the Kelley School of Business at Indiana