Money should not be an issue to make a film.
In order to find financing for your first feature, you need to realize what your goals are. Are you doing it just because you like making films? Or you want this particular film to be done, because you think it will change the world? Or are you trying to become famous and rich? Is it just an ambition to make a movie? Or do you really want to get money out of it?
There are many ways to finance your film:
• Personal Network
• Donors
• Foundations, Grants
• Partners, Investors
• Presales
• Loans
• Equity Financing
• Product Placement
Personal Network
Before producing your first feature, you are supposed to do some shorts to learn how to make films on a small budget or even without it. The ability to economize would give you more independence and save time and energy you spend to get the financing.
Many famous directors financed their first films from personal networks. Robert Rodriguez made his first feature El Mariachi for $7,000, half of which he got by volunteering for experimental clinical drug testing in Texas.[1]
David Lynch made his first feature, the cult film Eraserhead for $100,000. It took him over 6 years to raise money: he got a $10,000 grant from the AFI Conservatory, used money from friends and family, and even took a paper route to finish the film.[2] Stanley Kubrick's first features Fear and Desire and Killer's Kiss were privately funded by his family and friends.[3]
Donors
When you are looking for financing, do not concentrate on one source. You can find potential donors anywhere. Many people like an idea of being involved in film. Search for wealthy people from different businesses. Tell them that you will put their names and their companies’ names and logos in the credits. Place it already on your website, if you have one. It will cost you nothing, but give donors an impression of getting something back for their money. [4]
The donations in film are also tax deductible, which means that donors pay less tax.
The donors give money away and don’t expect any profits of your film. You should be clear about that. If they do, that would be an investment and you need to sign an agreement with them. Don’t accept any investments without an agreement.
The donations are supposed to go to non-profit organizations. You can pay serious fines for being a for-profit and taking donations, and also for being a non-profit and using your company wrong.
Foundations, Grants
There are plenty of foundations in United States that give grants to filmmakers. Your job is to find those matching your project. You can get lost in the number of foundations which are not for you. It takes time to find the right ones, to get all papers done, to apply for a grant and then to wait several months before they decide if they give it to you. If you are lucky, you get a small amount of money.
Usually grants are given to organizations and rarely to individuals. But you can always find a fiscal sponsor – an organization that would help you to receive a grant. For example, IDA (International Documentary Association) serves as a fiscal sponsor for more than 300 independent nonfiction projects each year.[5]
You can learn about foundations, grants, how to apply and the criteria at the Foundation Center. It’s free, if you go to their offices located in New York, Atlanta, Cleveland, San Francisco, and Washington DC. You can also visit the website http://foundationcenter.org/ You have to pay for access to databases, but there is some free information as well.
Partners, Investors
If your film’s budget is over $500,000, the reasonable way to get financing is to find partners – production companies and investors. Many independent filmmakers are also producers of their films. They create their own companies and deal directly with investors. But when you are making your first feature and you don’t have experience, it would be wiser to find a qualified partner – a production company that would help you with financing, production and even distribution. It doesn’t mean you give your project away – you still have a chance to get a director’s or executive producer’s credit.
To get attention from potential partners, you need to develop a business strategy for your film - the financial vision, the goals and people involved in your project.[6] The investors are willing to give money, if they are confident in getting profits. Film is a risky business. There’s no 100% guarantee of success. But there are some criteria of a successful film – popular genre, good script, big studio, famous director and stars. But those kinds of films could do with big budgets.
The production companies would rarely hire inexperienced directors for a big budget movie. But there are some exceptions made for talented directors who have already succeeded in producing music videos, TV series and commercials.
For your first feature, try to find a low budget project (in Hollywood low budget means up to 2 million dollars). The Comedy, Thriller, Horror are popular genres for first-time filmmakers. These films often go strait to DVD. Drama is tricky – it requires a good story, excellent actors and tasteful cinematography. The Comedies and Horrors are easy to sell no matter how good they are. Nevertheless, a mediocre Drama is hard to distribute.[7]
When you pitch your film, give an idea of the audience of your film, the potential distribution (theatrical, television or home video), and other ways to get money from your film, like soundtrack CD’s, video games, books and toys. If you are planning a theatrical release, think about marketing. Considering that advertising is very expensive, you need to find economical but effective way to promote your film.
Presales
Keep in mind the presales as a financing option to get money from distribution, before the film is completed. Presales usually work for filmmakers who already produced a number of films. If the distributors are confident in getting profits from a particular film, they can pre-buy the rights for their territories, before the film is finished and taken by other distributors. We are talking about films with a good buzz, like scripts from established writers and famous actors attached.[8]
Loans
The banks would rarely give a loan to films without investors involved, presales agreements, or product placements.
The loan can be provided against the presales contracts. If the filmmaker and distributor have a long business relationship, and the company has good reputation, the bank can offer a loan based on the financial value of the presales contracts. The bank obligates the buyer to accept the film as long as it meets certain technical standards, even if artistically the film is a disappointment.
Frequently the bank doesn’t provide the full sum indicated in presales contracts. It most likely lends a smaller amount considering the bank’s interest rates. Although, the bank can give a bigger sum, allowing for the budget’s overruns (gap financing) and charge higher fees.
What if the filmmaker goes over budget and cannot finish the film? To avoid that risk, the bank wants an insurance company to put up any money needed to complete the film, if it goes over budget. In order to give that guarantee, the insurance company would carefully learn the proposed budget to make sure that the film can be made for that money.[9]
Equity Financing
A first-time filmmaker would probably have troubles to finance his film through loans. The equity financing is possibly a better option. The equity financing is the way of raising money by selling stocks to individuals or investors.
The difference between the investments and bank loans is the level of risk. The loans are fully repaid, no matter how successful the film is. On the other hand, the investors can loose their money or earn, depending on the film.
The investors contribute to the risk of the film’s success, but they don’t want to be responsible for production problems or any budget overruns. For that reason, the investors prefer a limited partnership. According to the limited partnership agreement, the investors don’t own the film, but they share potential profits.[10]
Product placement
We live in the world of brands. Why not place it in your film? Next time you go to see a movie, pay attention to the product placement. The brands can be placed visually or verbally, or even as character attributes. Find creative ways to involve the brands in your film. Be smart. The audience doesn’t like it, when it’s too obvious.
Usually the big companies want to place their brands in big movies. The independent filmmakers would not be offered as much money as big studios. The companies also need to make sure that there’s nothing damaging for their brands. They would avoid placing the brands in the R-rated films full of violence and sex. [11]
References:
1) El Mariachi. (2008, June 7). In Wikipedia, The Free Encyclopedia. Retrieved 19:45, June 20, 2008, from http://en.wikipedia.org/w/index.php?title=El_Mariachi&oldid=217843681
2) David Lynch. (2008, June 19). In Wikipedia, The Free Encyclopedia. Retrieved 20:25, June 20, 2008, from http://en.wikipedia.org/w/index.php?title=David_Lynch&oldid=220458176
3) Stanley Kubrick. (2008, June 20). In Wikipedia, The Free Encyclopediai. Retrieved 20:23, June 20, 2008, from http://en.wikipedia.org/w/index.php?title=Stanley_Kubrick&oldid=220627313
4) From the interview with film producer Jorrit van der Kooi.
5) http://www.documentary.org/about-us
6) From the interview with film producer J. Genevieve Lenoir.
7) From the interview with film producer Jorrit van der Kooi.
8) From the interview with film producer J. Genevieve Lenoir.
9) Dean, Carole Lee (2007), The art of film funding: alternative financing concepts: Michael Wiese Productions, p.108.
10) From the interview with film producer J. Genevieve Lenoir.
11) Dean, Carole Lee (2007), The art of film funding: alternative financing concepts: Michael Wiese Productions, p.137.
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