Shaking the Money Tree, 3rd Edition. Morrie Warshawski

15% from individuals through an Internet letter-writing campaign

      Whatever mix chosen, try to pick one that has a high probability of success for you and the project. Sooner or later the filmmaker will have to present this fundraising “plan” to potential donors who will want to feel that it is plausible. More important, sooner or later the filmmaker will actually have to traverse this road toward a goal of adequately funding a project.

FOR-PROFIT

      The one area of fundraising that I do not cover in this book is the whole world of for-profit investments — support that comes to your project but is not a tax-deductible charitable donation. These major sources include:

      ♦ International Pre-Sales: Usually brokered by an International Sales Agent/Company. A good place to research what foreign broadcasters are looking for is the annual European Documentary Network’s Financing Guide (www.edn.dk).

      ♦ Gap and Supergap financing: Typically, a bank loan in the amount of 10% - 30% of the film’s budget.

      ♦ Federal and State tax incentives: These are offered federally and on a state-by-state basis and can change annually. There are professionals who specialize in assisting with this.

      ♦ Deferments: If your project does indeed look like it can make a profit, it is not unusual for the producer and/or cast members to defer all or part of their fees (usually to be recouped ahead of all other financing).

      ♦ Equity Investors: This can be single or multi-source and you’ll need a good lawyer to put together all the appropriate paperwork. The rules for how you can approach and involve equity investors vary from state-to-state.

      ♦ Postproduction House Investor: Sometimes you can get a post- production house to “invest” part or all of its services.

      ♦ Sponsorship and Product Placement: A sponsorship involves providing logo exposure outside of the film for a company, and product placement entails featuring the product directly in the film.

      To pursue most of these you will need a good entertainment attorney and/or accountant. More and more filmmakers are mixing nonprofit and for-profit sources of support. Innes Smolansky is a lawyer who has worked with many independent filmmakers. As she notes: “Traditionally, independent feature films were funded with investments or loans and independent documentaries were funded with grants and donations. Today we see more and more combinations of the two types of funding in the same project.” Here is Innes’ simple road map to keeping your options open for different kinds of funding:

      ROAD MAP TO MIXING DONATIONS & INVESTMENTS

      • Incorporate. A limited liability company (LLC) is considered to be the most popular and convenient legal structure through which to fundraise and produce a film. While other for-profit structures may be considered, creating and producing a film through a not-for-profit 501(c)(3) corporation will limit your ability to attract both investments and donations for the same project.

      • Create a Budget. Before you start fundraising, have a clear understanding of your budget needs. Have a Best Case Scenario Budget and a Worst Case Scenario Budget.

      • Identify Your Funding Options. This is often an ongoing process, but try to identify the big categories, for example: private loans and equity investments from friends, family and co-producing partners; donations from private individuals and grants from various granting organizations; pre- sale of some media rights, etc. Except for donations, all the funds that you raise should go directly into your LLC, but to receive donations you need a Fiscal Sponsor.

      • Find the “Right” Fiscal Sponsor. You should identify a not-for-profit 501 (c) (3) organization that has a logical connection with your project. This usually means that one of the purposes of a fiscal sponsor’s existence must be to support audiovisual projects, or a cause that your film falls under.

      • Channel the Funds. All the funds you raise as donations from private individuals or grants that require a 501(c)(3) organization to receive them should be channeled through your fiscal sponsor. The donor or granting organization should send the funds directly to the fiscal sponsor, clearly identifying for which project the funds are to be used. The fiscal sponsor will deduct an administration fee (usually between 5% and 12%), and transmit the rest to your LLC. The donor will receive a receipt from the fiscal sponsor for making a tax-deductible charitable donation. You can then use the funds received from the fiscal sponsor for production of your film and keep your portion of the profits should your film turn out to be profitable.

      —Innes Smolansky, Esq.

       [email protected]

      CHAPTER THREE

      PATCHWORK

       QUILT —

       Putting Your

       Project Together

       “You don’t have to plan to fail. You just have to fail to plan.”

       — Author Unknown

      Filmmakers who come to me for advice have usually “hit the wall” in fundraising — they have tried everything possible to acquire support for a project but just can’t seem to get past a certain point. I am often placed in the position of having to determine and then tell filmmakers what they are doing wrong so we can understand why their rate of rejection is so high. I said earlier that many fundraising problems are rooted in basic career development issues (e.g. comportment, mission, professional direction). There is one other great impediment to funding: hitting the street before the filmmaker is actually ready to fully articulate the project in a logically convincing and emotionally engaging manner.

THE STORY THAT HAD TO BE TOLD

      What the filmmaker must ask before beginning to fundraise is: “Do I know everything I must know about this project before I approach a funder? Can I answer any potential questions about my project that anyone might ask?” Too many filmmakers start looking for money before they have done the very basic groundwork on their project, and this lack of preparation leads to a number of quick rejections by potential funders. When I ask filmmakers how they got involved with projects, they often say, “I ran across this incredible story/person/organization and I knew immediately that this was a story that must be told.” I have heard this sentence almost word-for-word so often that it must be a virus specific to independent filmmakers.

      What I have never heard a filmmaker say is, “This is a story that must be heard.” In other words, the filmmaker must realize that just because the idea for the film fills her with great excitement and she feels an overwhelming compulsion to tell it, she must prove that a lot of other people will feel the same way and want to hear her story. She will have to fully address basic questions of need, audience, distribution, marketing, crew and staff, and budget. Until these are all as well articulated as possible, it is a mistake to start looking for financial support.

      Question Number One concerns “need.” Is there a need in the world for one more film about XYZ? I ask my clients the following questions: “Can you name five titles of other films that people will think of immediately when you mention your new film?” If the filmmaker says “no,” then I know more homework needs to be done.

      Every film fits into some niche where it will be clustered with other similar titles or subjects. The filmmaker has to do the research that uncovers all these films. When any seem very close in content, the filmmaker must make an effort to actually see those films. No funder wants to place support behind a program that has already been