Film Producing: Lack of Funding in Indie Film

Insomnia has struck again. It’s funny how it only comes during a production, but since I’m awake hours before I’m due on set, now is as good as any to talk about a gap in indie filmmaking: funding. Every project I have worked on has had hiccups with funding. It either isn’t enough for what we need, we have to dig into our own pockets, or it just flat isn’t there. Filmmaking is a business just like any other business, so why is it so difficult to finance a project and pay people livable wages?

There are thousands of grants, hundreds of investors who are looking to unload some cash in exchange for tax benefits, and even companies willing to donate equipment for indie filmmakers. But the problem stems from the idea of a “return on investment” or ROI. What do the benefactors get in return?

If the film is Zombie Cheerleaders Versus Vampire Sorority Sisters, investors will probably recoup something from video on demand and DVD sales. But if it’s an indie arthouse film, odds of any sort of return are slim to none. That’s why you see things like A Christmas Horror Story coming out later this year with William Shatner. Where are the “breakout indie films?”

One of the biggest problems is the over-saturation of the market. The barrier to entry into the film industry is getting lower and lower thanks to the iPhone and GoPro. Equipment is getting cheaper and more accessible, but inevitably, so can the quality of the writing/acting/delivery.

When I approach an investor and say our budget for our “breakout arthouse film” is half a million dollars, they balk and say, “How can that be when X film was made for just $10,000?”

Just because it can be shot for $10,000, does not mean it should be.

The other question investors will ask is, “Who’s in it?” Investors are gun-shy these days with their money, and rightfully so. You never know when the market is going to take a turn for the worse. So when they are asking this question, they aren’t looking for a fresh face or the “next Jennifer Lawrence.” They are looking for the old face of the known and established Jennifer Lawrence because that will guarantee their ROI.

But Jennifer Lawrence isn’t going to be in anything without a substantial budget or paycheck. Therein lies your Catch-22.

Many filmmakers then turn to crowdfunding. Platforms like Kickstarter and Indiegogo are great places to get public funding that does not equal a loan. Crowdfunding is where you showcase your film or product to the world, and people donate a dollar here or there, and if you gain enough interest, your project can get fully funded.

However, these days, due to the over-saturation of the market, the competition is much more fierce for the public’s money. You have to start a crowdsourcing campaign before your crowdfunding campaign. 

What is crowdsourcing? It is where you get a social media following before you begin pre-production. It’s a way to get people aware and excited about your project in the development stage, so when you do launch, you already have a core audience to launch to.

“You have to build a ground swell of support in order to float.” Richard “RB” Botto @Stage32

Then, once you have your support, you have an audience that is keen to see your film, making your project more desirable to potential distributors. You have a guarantee against your investment in your core audience.

Crowdfunding is not a guarantee, though. There are pitfalls and hidden agendas behind every penny, but I will dedicate another blog to the art and skill of crowdfunding.

When crowdfunding doesn’t go your way and the investors are non-existent, there are tax incentives or grants you can apply for through government schemes. These processes always take longer, but if you can get the BFI, for example, or your state film commission behind you, you’re golden.

In the UK, you can apply for tax credit between 20-25% of your budget. The incentives are why a large portion of Hollywood films are moving over the UK. Did you think The Avengers was an American production?

But in the US, depending on the state, you can also get a percentage of your budget back in the form of tax relief. In Texas, you can get between 5 and 20%. If it’s just 5%, you would be better off checking out Louisiana or Georgia who are both facing  a resurgence of the art industry with incentives around 30%.

The caveat is, of course, approval by these institutions. Applications can take months or years to get through the red tape, and these are all for tax credit, not upfront cash. You will still need to find a loan for your actual production. But these tax incentives give a better financial picture for investors. It guarantees their ROI.

It really is a shame funding is so difficult to come by in the film industry. Arts and entertainment shouldn’t be looked at as just a “past time” or “hobby.” It should be regarded as a proper career that people can make a living from. But until we have guarantees in place for everyone to recoup their investment, unfortunately, finance will continue to be one the biggest hiccups in the industry.

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