Monday, September 24, 2012

Crowd Funding

I talked about Crowd Funding before but there's been some major changes that are quite good. Basically it's where people donate money to charities,  political campaigns, early software development in hopes of getting something going.

Where do movies come in?

Movies can be funded by these "donations".

It can work in a number of ways, you could create a proposal that looks like a Securities Commission stack of papers and spend tons of money on lawyers to make it look good.

Or you can go to and and by now there are probably a dozen more. These are websites that allow you to put your project onto their website to raise money for your project be it a movie, an artist, a recording artist, a poet, anything in the arts.

It works like this; you post your project, a movie, on which is probably the most popular. This morning I found that there are over 700 film projects on it's site. And they're everything from movies to shorts to documentaries.

You should have something for potential donors to see like maybe a video trailer or pictures or even yourself telling them how much you want to make your movie. First you give out the amount you need, let's say $25,000 for a movie with actors and a small crew. Naturally you should have this all planned, budget, editing, names of crew and cast.

Then you get a certain time limit in which the budget has to be raised. Then you wait and see who invests and hope you get your money. The amount needed is on the left side and the amount you raise is on the right side. And you should have photos and anything visual that will enhance a donor to put in $10 or more. 

That's what the average donor gives. And if you don't raise that $25k then you don't get any of the money. lets you keep whatever you raise.

And what do the donors get? Well, since they are donors, not investors really, they don't get anything. But someone figured out how to go around that. Donors, depending on the size of their investment can get t-shirts, a DVD of the movie, a visit to the set, even a part if you donate $500 or more, as long as there's enough extras needed.

And since there's over 700 movies asking for money, it is working. To see it go to either of those sites, it's quite interesting.

Enter President Obama.

You may have heard about the "Jobs Act" that he signed this year. This, interestingly enough, can apply to movies. The act was signed to help small businesses and startups to help the economy recover. The thing is that the maximum was raised to $1 million. 

Translated most of the movies in those websites are asking for anything from $5000 up to $500,000 but now, because of the Jobs Act, you can get up to that nice $1 million. It's a little harder than the scenarios I described above, at $25,000 you won't have to fill out complicated papers but if you want $1 million, you can and should hire a lawyer. In fact you should have a lawyer for the low budgets, if you can find a cheap one.

It's still too new to see how this will work. We had a similar plan in Canada from 1975 to 1985 in which investors could invest into movies and receive a 100% tax write-off. Meaning they could subtract that much money from their yearly earnings.

Obviously these people were high rollers, Ghostkeeper 1980 was funded for $650,000 by 4 Calgary investors. Other movies cost as much as $10 million.

But naturally there's some people who get a little greedy. And you know who. Lawyers and accountants and producers. And they begin to take money, some films I know had budgets of $5 million and only $3 million was spent on making it. The rest went to those bad guys. Eventually the Canadian govt cut the tax shelter off, saying they were just a little too greedy.

So let's see what happens.

In the meantime, I'm already planning a low budget feature for around $10,000.