What Nonprofits Should Know About Form 990
An overview of the Form 990 series, filing thresholds, reporting requirements, due dates, and why good nonprofit accounting...
Article · June 2026Industry
Nonprofit Organizations
Financial Stewardship That Supports Your Mission
Nonprofit organizations are accountable not only for how much money they receive and spend, but also for how those resources are used.
Boards, donors, grantors, regulators, and management may all rely on accurate financial information.
Akato & Associates helps nonprofits establish accounting and reporting practices designed to support transparency, compliance, and responsible stewardship.
Fund Accounting
Nonprofit accounting often requires resources to be tracked according to restrictions and purpose.
We help organizations account for:
- Contributions
- Donor-restricted funds
- Unrestricted funds
- Board-designated funds
- Grants
- Program expenses
- Management and general expenses
- Fundraising expenses
- Special projects
- Capital expenditures
Functional Expense Reporting
Nonprofits may need to classify expenses by both their nature and function.
Functional categories generally include:
Program Services | Management & General | Fundraising
Appropriate allocation procedures help produce more meaningful financial reporting and support Form 990 preparation.
Grants & Restricted Contributions
Grant agreements and donor restrictions can affect when and how funds may be used.
Accounting systems should allow organizations to track restricted resources separately and demonstrate that expenditures are consistent with applicable restrictions.
Tax Compliance
Services may include:
- Form 990
- Form 990-EZ
- Form 990-N considerations
- Form 1023
- Form 1023-EZ
- Unrelated business income considerations
- Payroll tax matters
- State compliance considerations
- IRS correspondence
Unrelated Business Income
Tax-exempt organizations can still owe federal income tax on certain activities unrelated to their exempt purpose.
We help organizations identify activities that may require further evaluation for unrelated business taxable income (UBTI) and potential Form 990-T filing obligations.
Board Reporting & Internal Controls
Good financial reporting should give the board enough information to provide meaningful oversight.
We can assist with:
- Budget-to-actual reporting
- Cash reporting
- Restricted fund balances
- Internal controls
- Approval procedures
- Segregation of duties
- Financial policies
What We Help You Manage
- Fund Accounting
- Grants
- Restricted Funds
- Form 990
- Budgets
- Internal Controls
- Board Reporting
- Tax Compliance
Frequently Asked Questions
What is fund accounting?
Fund accounting helps nonprofit organizations track resources based on their purpose and restrictions.
Which Form 990 does our nonprofit need to file?
The appropriate filing generally depends on gross receipts, assets, organization type, and other circumstances.
Can a nonprofit owe income tax?
Yes. Certain income from activities unrelated to the organization's exempt purpose may be taxable.
What's the difference between Form 1023 and Form 1023-EZ?
Form 1023-EZ is a streamlined exemption application available only to organizations meeting specific eligibility requirements.
What are donor-restricted funds?
These are contributions whose use has been limited by the donor for a particular purpose or period.
Why are internal controls important for a small nonprofit?
Even small organizations benefit from controls over cash, payments, approvals, and financial reporting. When staffing is limited, controls can be designed around the resources available.
Services
How we work with nonprofit organizations clients
The service lines our clients in this sector call on most.
Resources
Related Resources
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