05 Oct Film Fund-amentals: Lost in the Crowd
Microfinancing is hot. The concept has even made its way to The Simpsons, a show that lost its street cred ages ago but still has Lisa as the closest thing this country’s got in the way of rational political discourse. So the concept has just received its biggest exposure in the US (not counting numerous PBS reports that nobody has ever watched).
The idea isn’t really new. In fact, it is really, really old. But what is new is the recent Internet adaptation of various aspects of microfinancing designed to fund art projects ranging from music to film to writing. For the past year and a half, KickStarter.com has been a key platform for artists seeking funds for their project (in amounts ranging from $1,000 to $10,000). A variety of other websites have emerged, such as IndieGogo.com, offering similar arrangements for the cash-strapped artist. Referred to as crowdfunding, the process almost sounds like an old Mickey Rooney film (“Hey, kids! Let’s put on a show!”).
Does it work? Yeah… maybe…kind of, depending on the project. There are already many success stories as well as some not so successful stories. Of the various major sites for crowdfunding, there are three that are most widely in use for small film projects, with the major focus on KickStarter and IndieGogo. Personally, I find the quirky concept behind Buyacredit.com almost irresistible (give money and get a screen credit on a low-budget mainstream film), but the project veers way outside the normal boundaries of the average indie filmmaker.
Unlike microfinancing, money raised through crowdfunding is not to be viewed as a loan, investment or any other standard form of financial process. People who post funds through these sites toward a project do not receive any form of actual return on the money given, nor do they receive any type of ownership over the project. On the other hand, the artist is expected to return to the “non-investors” (I’m not sure what else to call them) some form of a gift for their support of the project. For example, a writer seeking funds to self-publish a book might offer a free copy of the book.
So far, so good. Just post your project, ask for money and then kick back with a brewski and watch the dollars pour in. Well, not exactly. First, you will need a bank account (at KickStarter it has to be a US account; IndieGogo does provide a global option). This doesn’t sound like a heavy demand, but thanks to modern banking policies you would be surprised at some of the exceptions out there.
Then you have to post your pitch, and I mean you really have to make a pitch. Both KickStarter and IndieGogo present a booming market in movie and web broadcast projects. The crowdfunding field is a crowded field, and nobody really knows just how big the funding crowd may be. So whatever you are posting about your project, it has to somehow catch people’s attention. Hook them into your project. Maybe even make them feel good about themselves if they give you money. If that doesn’t work, maybe you can make them feel guilty. It almost sounds like a PBS drive.
With your pitch, you set both a financial goal (say $3,500) and a deadline (let’s say 120 days). By the end of that period, if you reach your goal (or even exceed it), you pay a small percentage to the site (4 percent at both KickStarter and IndieGogo) and then take the money and run (well, you’re actually supposed to do the project). It is when you don’t meet the financial goal that the difference between the two major sites becomes evident. At KickStarter, it’s all or nothing. If you don’t meet the goal, you get nothing. At IndieGogo, failure to meet the goal results in the site receiving 9 per cent of the lower total you did achieve.
Obviously, the all-or-nothing approach at KickStarter is one of the main reasons why some people prefer IndieGogo. I cannot personally recommend either of these platforms and I suspect that a person would really have to decide for themselves what suits them best. To be honest, I’m still just a little thrown by the whole concept (“Say, what? People just give you money?”). But for any filmmaker pursuing a small-budget production (and I mean really small), it’s worth considering as a means of raising money. In some respects, it also makes more sense than the grants application process (the odds for success could actually be a lot better).
It does seem to me that there are a couple of little oddities to the crowdfunding system. The first is the issue of what you might want to offer in return to the people who donate money. Though they simply give money without any form of actual investment or stake in the project, there is the basic notion that you are giving them something. One web developer is offering free tote bags. Oh boy! This really does sound like a lousy PBS fund drive (minus Ken Burns pitching the “estate” plan). Though there are many possibilities of what a filmmaker could offer, I have a bad feeling that the charm could wear thin real fast.
Then there’s the question of just how many people are out there who are really that interested (or even able, with today’s economy) in sending money to other people for no other reason than the sheer giddy pleasure of supporting largely unknown artists (and maybe getting a tote bag). Obviously, there are some folks out there who are doing this (despite the fact that most of the donated amounts wouldn’t even qualify for a tax deduction). Their generosity is a noble thing, but how big of a “crowd” is this, really? Unfortunately, there’s no real way of estimating these figures.
Likewise, I’m incredibly unclear on the legal ramifications. Oh sure, they simply post the money, get whatever, and the artist goes on to finish the project. But what happens when somebody throws a monkey wrench into this process? For example, somebody posts a few bucks into a movie that they thought was about the joys of childbirth only to discover that they misread the pitch and just funded a documentary on abortion. Suddenly they want to file suit to recover their dough as well as get lots more back for pain and suffering (and maybe some reading lessons on the side). So how does this work legally?
I haven’t a clue. I’m not a lawyer. I only know (from experience) that these things happen. So it is a point to keep in mind.