For tax-exempt organizations, form 990 is more than a tax filing—it’s a vital tool for transparency and governance. At the Foundation for Accounting Education’s Exempt Organizations Conference on Feb. 27, Zachary Segal, CPA, senior manager at CohnReznick LLP, led a session exploring how nonprofits can strengthen their compliance, improve public perception and avoid common mistakes when filing Form 990. 

Segal emphasized that Form 990 is not just for the IRS; it is reviewed by donors, watchdog organizations and regulators. “People are going to read it. There are stakeholders who are involved—it’s going to these watchdog organizations,” he explained. Organizations like Charity Navigator, GuideStar and the Better Business Bureau assess nonprofits based on the information disclosed in their filings. Segal noted that many organizations fail to realize how their Form 990 impacts their reputation and funding. “I have clients who call me, and instead of caring about who they’re serving, what’s their mission, they care about, ‘What is this? What is my ranking here?’”

One of the most critical areas discussed was the gap between financial statements and Form 990. Many organizations struggle with revenue recognition, expense allocation and public support calculations, leading to reporting inconsistencies. He warned, “You want to make sure that these changes are changed for a reason that’s understood, that’s actually factual, as opposed to changing because somebody accidentally checked the wrong box.”

Segal also highlighted governance best practices, including whistleblower protections and executive compensation reviews. He warned against misreporting fundraising income and emphasized the importance of correctly distinguishing contributions from event revenue. Additionally, he noted that nonprofits often overlook related-party transaction disclosures on Schedule R, which can invite regulatory scrutiny. 

Closing the session, Segal reinforced the importance of viewing Form 990 as both a compliance requirement and a strategic tool. “It’s really important to understand the story you’re telling,” he said.