For many nonprofit organizations, Form 990 is one of many year-end compliance requirements competing for limited time and resources. Between advancing your mission, managing operations, fundraising, and overseeing governance responsibilities, the annual filing can easily become just another item on the checklist.

However, Form 990 serves a much broader purpose than meeting an IRS requirement. Because it is publicly available, donors, grantmakers, board members, regulators, and other stakeholders often use it to evaluate an organization’s financial health, governance practices, and overall stewardship. Errors, inconsistencies, or incomplete disclosures can create compliance concerns and raise questions about organizational oversight.

As you prepare for your next filing, here are several common mistakes nonprofits should avoid.

Assuming Last Year’s Filing Still Applies

Many organizations take the same filing approach year after year without reconsidering whether circumstances have changed. While that may be appropriate, it should never be automatic.

The form your organization is required to file depends on several factors, including its tax-exempt classification, annual gross receipts, total assets, and activities. For example, smaller exempt organizations may qualify to file Form 990-N, while others may be eligible to file Form 990-EZ instead of the full Form 990.

Organizations should also remember that limited activity does not necessarily eliminate their filing obligation. Even if programs were reduced, revenue was minimal, or operations were largely inactive during the year, filing requirements may still apply.

The consequences of overlooking those requirements can be significant. An organization that fails to file a required annual return or notice for three consecutive years automatically loses its tax-exempt status. Restoring that status can be both time-consuming and costly, often requiring additional filings, IRS fees, and professional assistance.

A best practice is to review filing requirements annually, establish internal deadlines ahead of IRS due dates, and confirm that electronic submissions have been successfully accepted.

Submitting Financial Information Without Reconciliation

Form 990 relies on information from multiple sources, including accounting records, donor management systems, payroll reports, and audited financial statements. When those records are not reconciled, inconsistencies can easily find their way into the return.

Common issues include:

• Contribution revenue that does not align with donor records
• Grant revenue reported inconsistently throughout the return
• Compensation figures that cannot be reconciled to Forms W-2 or 1099
• Beginning net asset balances that do not match the prior year’s filing

Not every difference indicates an error, but every significant difference should be understood and documented before the return is finalized.

A clear reconciliation process improves reporting accuracy, provides support for reported amounts, and creates a stronger foundation if questions arise during a board review, audit, or regulatory inquiry.

Treating Narrative Disclosures as Boilerplate

Some of the most impactful sections of Form 990 are not financial at all.

Part III requires organizations to describe their mission and program accomplishments. Yet many nonprofits simply copy narrative descriptions from prior-year filings even when programs, priorities, or outcomes have changed.

Generic statements rarely tell stakeholders much about an organization’s impact. Instead, nonprofit leaders should use this opportunity to provide meaningful context around the services delivered, communities served, and measurable outcomes achieved during the year.

For example, rather than stating that the organization “provided educational services,” a stronger narrative might describe the number of workshops conducted, participants served, or certifications completed.

Annual review by program leadership can help ensure these disclosures accurately reflect current operations and are supported by organizational records.

Forgetting That the Return Is Public

Unlike many tax filings, Form 990 is intended for public inspection. As a result, the return should be reviewed not only for technical accuracy but also through the lens of an external stakeholder.

Financial information, governance disclosures, compensation reporting, and program descriptions all contribute to how an organization is perceived by donors, grantmakers, and community partners.

Before filing, organizations should compare Form 990 to other publicly available information, including:

• Audited financial statements
• Annual reports
• Organizational websites
• Board minutes
• Approved compensation documentation

Differences may be completely appropriate, but they should be understood and, when necessary, documented or explained. Schedule O often provides a valuable opportunity to add context and enhance transparency.

Organizations should also exercise caution when preparing public-inspection copies to ensure sensitive information is handled appropriately and disclosure requirements are followed.

Creating a Filing Process That Relies on One Person

Many Form 990 issues stem from a lack of communication rather than a lack of technical knowledge. Important information often resides with multiple individuals across finance, development, operations, and leadership teams.

Even organizations with limited resources can benefit from a formal, repeatable filing process.

Consider developing a process that includes:

• Reconciling key financial records after year-end close
• Gathering information from accounting, payroll, development, and program teams
• Reviewing narrative disclosures for accuracy
• Completing internal leadership and board review procedures
• Verifying IRS acceptance of the electronic filing

A consistent process helps reduce errors, improve efficiency, and ensure the preparer has complete and accurate information.

How HTB Can Help

Form 990 is more than a compliance requirement. It is an opportunity to demonstrate transparency, accountability, and sound financial stewardship. HTB’s nonprofit professionals can help you navigate filing requirements, review reporting and disclosure considerations, identify potential issues before filing, and implement processes that support accurate, consistent reporting year after year. With the right guidance, your organization can strengthen compliance while staying focused on advancing its mission. Contact us today to start the conversation.