Record Retention Requirements for Federal Grants: What to Keep and For How Long

Why Record Retention Matters for Federal Grant Recipients

Record retention is one of those grant management responsibilities that receives little attention until something goes wrong. When an auditor requests documentation for a transaction that occurred two years ago, or when a federal agency questions a cost three years after the award closed, the organization's ability to produce complete and organized records determines whether the issue is resolved quickly or escalates into a serious compliance problem. The Uniform Guidance establishes clear requirements for what records must be kept and for how long, and every organization receiving federal funds is expected to comply.

The consequences of inadequate record retention extend beyond individual audit findings. Organizations that cannot produce required documentation may face disallowed costs, repayment demands, and restrictions on future funding. In extreme cases, inability to substantiate expenditures can be interpreted as an indicator of fraud, triggering investigations by the Office of Inspector General. Proper record retention is not just a compliance requirement; it is a risk management strategy.

The Three-Year Retention Rule

The Uniform Guidance at 2 CFR 200.334 establishes the general requirement that financial records, supporting documents, statistical records, and all other non-federal entity records pertinent to a federal award must be retained for a period of three years from the date of submission of the final expenditure report. This three-year clock starts not from the end of the performance period but from the date you submit your final financial report, which may be several months later.

Several important exceptions extend this retention period:

• Pending litigation, claims, or audits: If any litigation, claim, negotiation, or audit finding involving the records has been started before the expiration of the three-year period, the records must be retained until the matter is completely resolved and final action is taken.
• Indirect cost rate proposals: If the organization has submitted an indirect cost rate proposal or cost allocation plan, the records supporting the proposal must be retained for three years after the rate or plan was negotiated, approved, or otherwise settled.
• Real property and equipment: Records for real property and equipment acquired with federal funds must be retained for three years after final disposition of the property.
• Program income after the award period: If program income is earned after the end of the award and the terms require continued reporting, records must be retained for three years from the end of the fiscal year in which the income was earned.

For a comprehensive overview of how these retention requirements fit within your broader compliance obligations, see our guide on post-award grant management and compliance.

What Records Must Be Retained

The scope of records subject to retention requirements is broad. Organizations should retain every document that supports or relates to the expenditure of federal funds. Key categories include:

Financial Records

• General ledger and journal entries: All accounting records showing charges to the grant, including adjusting entries and corrections.
• Bank statements and reconciliations: Monthly bank statements and reconciliation worksheets for accounts through which federal funds were received or disbursed.
• Payroll records: Timesheets, effort certifications, payroll registers, and documentation of fringe benefit calculations for all personnel charged to the grant.
• Vendor invoices and payment records: Original invoices, purchase orders, receiving reports, and proof of payment for all goods and services charged to the grant.
• Travel documentation: Travel authorizations, expense reports, receipts, and per diem calculations for all grant-funded travel.
• Financial reports: Copies of all SF-425 reports and any other financial reports submitted to the funder.

Programmatic Records

• Notice of award and modifications: The original award document and all subsequent modifications, including budget revisions and no-cost extensions.
• Progress and performance reports: All interim and final programmatic reports submitted to the funder.
• Correspondence: Significant communications with the program officer, grants management specialist, or other agency personnel, particularly those involving approvals, denials, or guidance on compliance matters.
• Evaluation data: Data collected for program evaluation, including surveys, assessments, and outcome measurements.

Procurement Records

• Solicitation documents: Requests for proposals, invitations for bids, and other solicitation materials.
• Bid evaluations: Documentation of the evaluation process, scoring sheets, and selection rationale.
• Contracts and agreements: Executed contracts, subaward agreements, and consultant agreements.
• Conflict of interest disclosures: Documentation of any real or potential conflicts of interest in the procurement process.

Understanding the cost principles that determine what expenditures are allowable helps you identify which financial records are most critical. Our guide on grant budget fundamentals and federal cost principles explains this framework thoroughly.

Storage Methods and Best Practices

The Uniform Guidance permits organizations to retain records in electronic format, provided that the electronic copies are legible, complete, and accessible throughout the retention period. Many organizations have transitioned to primarily electronic record keeping, which offers advantages in terms of storage space, searchability, and disaster recovery. However, electronic systems must include appropriate backup procedures and access controls.

Best practices for record storage include:

• Consistent file structure: Organize records by grant, fiscal year, and document type using a standardized naming convention that all staff follow.
• Regular backups: Back up electronic records to a secure off-site location or cloud-based system with redundancy.
• Access controls: Limit access to grant records to authorized personnel and maintain logs of who accesses sensitive files.
• Retention schedule: Maintain a written retention schedule that specifies the retention period for each category of records and assigns responsibility for monitoring compliance.

For guidance on how strong organizational infrastructure supports all aspects of grant management, including record keeping, see our article on organizational capacity and partnerships in grant proposals.

Destruction of Records

When the retention period for a set of records expires, organizations should follow a formal destruction process. Do not simply discard records into regular trash. Financial and personnel records may contain sensitive information that requires secure destruction, such as shredding for paper documents or certified data wiping for electronic files. Document the destruction by recording what was destroyed, when, by whom, and under what authority.

Before destroying any records, verify that no litigation, audit, or claim is pending that would extend the retention period. When in doubt, retain the records until you have confirmed that all obligations have been fully satisfied and the statute of limitations for any potential claims has expired.

Building a Culture of Documentation

The organizations that handle record retention most effectively are those that build documentation practices into their daily operations rather than treating it as a periodic filing exercise. When every staff member understands that their timesheets, receipts, and project notes may be examined by auditors years after the work is complete, the quality and completeness of documentation improves at the source. Training, clear policies, and consistent expectations from leadership all contribute to a culture where good record keeping is simply how the organization operates.

Learn more about grant writing strategies at Subthesis.

Strengthen Your Grant Management Foundation

Record retention is a fundamental competency that supports every other aspect of federal grant management. The Complete Grant Architect course provides comprehensive instruction on documentation standards, compliance systems, and the full lifecycle of grant management from application through closeout and beyond. Enroll today and build the knowledge base that keeps your organization audit-ready and positioned for continued funding success.