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By Leslie S. Osborne

Reprinted with permission from PerformInk Newspaper (http://www.performink.com)

Financing a film is often the trickiest and most elusive aspect of moviemaking. There is not a single path to film financing; there are as many paths as there are people and film genres. Some filmmakers have held years’ worth of bake sales. Some have started "1-900" numbers or sold hats and t-shirts. Chicago resident Robert Townshend became known throughout the world when he financed his first feature with several credit card offers he received through the mail. Despite the diversity in method there are a few basic guidelines to financing films that need to be considered.

Be Prepared

Being prepared includes: defining your film market, developing a business plan for your film, defining production limitations, preparing a detailed budget for your film and addressing your own strengths and weaknesses related to the business end of film. Morrie Warshawski, author of "Shaking the Money Tree: How to Get Grants and Donations for Film and Video" says that some common weaknesses are "a hatred of doing business activities, a fear of being rejected [or] a lack of focus." Part of the financing effort will be packaged in what is usually referred to as a prospectus or memorandum. The other part of the financing effort will be packaged in a confident and knowledgeable filmmaker with the endurance of a long distance runner.

 Establish the Budget

It is important for the producing filmmaker to establish a budget range for his or her picture. The most responsible budget planner will choose a genre for their film and determine average gross incomes for similar films. If the filmmaker is producing a light comedy he/she should get film gross totals for other light comedies with similar subjects. Then, average the total film grosses for these films and divide by three. This final number would be the acceptable budget for the film. A film must make three times the amount of its original budget in order to break even; this is due largely to the cost of distribution and marketing.

Finding the Funding

Once the business dimension of filmmaking is addressed, a filmmaker can proceed by approaching potential funding sources. The most common sources of film financing are studios, independent production companies, finance specialists, private investors, foreign investors and grants. It is rarely recommended that filmmakers approach family members or close friends. The most important thing a filmmaker can do is be as creative with the financing efforts as they plan to be with the film itself.

"Start with your brain," suggests Morrie Warshawski. "Who have you met or talked to in the past year that likes you and your work? Who has someone suggested you talk to? Who have you wanted to ask for money but avoided for one reason or another?" Go through your Rolodex and ask your lawyer who they know.

The Studio System

Motion picture studios, by far, finance more films than any other source. They often have the best resources to get a film financed, distributed and marketed, and they are extremely capable of working with higher budgeted pictures. When a studio finances a film, the producer is usually offered an up-front fee for the film. The higher the up-front fee the lower the percentage of film sales a producer receives. Accepting a higher fee, however, will better ensure that a filmmaker receives some money for his or her effort. Studio accounting is complicated, and it is also difficult in assessing how much money is actually earned by a particular picture. If earned income can not be easily traced, it cannot be easily paid out. Studio financing, however, is not for, or available to, everyone. Filmmakers who are interested in producing documentaries or less mainstream subjects or styles will not usually find interest from a studio. Aside from this, studios work primarily with union members who have a proven track record. This includes the director or producer and will disqualify many independent filmmakers. A beginning or unknown filmmaker can expect not much more than polite letters expressing a desire to talk when future projects arise. Directors like John Singleton have proven that this is not etched in granite. He received interest in Boys in the Hood while he was still in film school.

The Independent Production Company

Although not nearly as plentiful as other financing resources, independent production companies do finance filmmakers’ feature films. These companies often have a deal with a studio to finance a certain amount of films. A production company will always produce their own films first but can have money left over for other projects. The details and complications of getting financing through an independent production company, in this case, is usually reminiscent of working with a studio. Experienced filmmakers who are producing their second or third feature film are best suited for investigating this route.

Seeing a Specialist

Film finance specialists can take many forms and wear many hats. A finance specialist may be an attorney or tax specialist. They can be venture capitalists or managers of investment pools. A film finance specialist will usually "pool" money from a variety of clients or sources. Even though a specialist may finance your film from a variety of sources, the money is distributed to the production company as one lump sum. They may request that you receive money in stages, for pre-production and production as your film progresses. Specialists, like studios and independent production companies, usually require strong film packaging before they will consider investing in a film. It is usually best to approach a film finance specialist through an attorney or producer representative. Often, after contact has been established, the specialist will maintain a direct relationship with the filmmaker. A filmmaker who is looking for representation by an attorney or producer representative can usually find listings in local and state film production guides.

The Private Investor

The private investor is the most diverse investment group a filmmaker can approach. A private investor can be a banker, realtor, doctor or anyone who has large sums of money to invest. It is especially important that a filmmaker consult an attorney prior to approaching private investors. Different securities and contractual laws need to be considered beforehand. The amount of people and manner in which a filmmaker contacts them may effect the legal standing of his or her film. Private investors often have adversities that are different than studios or other investment groups. If they are not familiar with the business side of film, private investors will often have a hard time comprehending the idea of making a film investment. Take the time to make sure they understand your prospectus. A filmmaker would be wise to practice discussing the business aspect of his/her film with other people before approaching a private investor. This will help a filmmaker learn to present ideas in layman’s terms.

Hosting a fund-raising party may an alternative for a filmmaker to connect with financing prospects. It can take some of the pressure off meeting person to person. It can also be a way for potential investors to meet with key crew or cast members. If modest donations or investments are desired then a filmmaker could host a party in a modest or middle income atmosphere. If large donations or investments are desired then a filmmaker should host the party in an upper income atmosphere. You can consider the homes of friends, associates, as well as hotels, for hosting such parties.

If a filmmaker has key crew or cast members in a film or play, investors can be invited to see it. Go with them and take the time to correlate how the cast or crew member’s performance will add to the film. When Spike Lee was financing She’s Gotta Have It he invited potential investors to accompany him to a play that his lead, Traci Camila Johns, was in. An investor’s response to your cast or crewmember may be subjective due to the film or play they are seeing.

Foreign Financing

Foreign financing is a route often unexplored by filmmakers. In an attempt to encourage a film industry to develop, a country or region will often offer attractive tax incentives for investors. These incentives usually make it difficult for an investor to lose money on a film investment, even if the film fails. In some instances, ties to production funds are already established or easily established by the government itself. This will make some of the work associated with financing easier. Often a foreign financing source is interested only in partially financing a particular film. The positive aspect in regard to receiving financing from a foreign source, is, of course, receiving financing. Less positive aspects may include: replacement of key crew or cast with persons from the financing country, a need to shoot part of or the entire production within the country where financing is received, or, a need to utilize the financing country’s post-production facilities or production equipment. All areas of the production need to be carefully considered and weighed. Moving key crew and cast out of a country can easily add $10,000 or more to a film’s budget due to room, board, and new travel expenses.

Grants

Grants are another viable source for film financing. For filmmakers who are interested in art films or documentaries, they are often the sole or primary source of funding. In the US there are hundreds to thousands of organizations that offer production money. Many of these funds come from the private sector.

Grants, in general, are geared toward non-commercial and non-profit films. They are often issued under subjects. For example, a group may be offering grants for films that have environmental issues at the heart of the film. A documentary on ozone depletion may be an appropriate entry, as well as, a drama about a family that lives near Three Mile Island.

The library or the Internet are good places to query about who grant providers are. Applying for grants usually involves a great deal of paperwork and patience. Grants are sometimes geared toward specific phases of filmmaking. Some grants provide completion money, others, startup funds. How a grant can be used is usually listed with any information about the grant provider.

Regardless of how a filmmaker manages financing, researching the business end of his/her film is a prerequisite. After this is done, and the prospectus completed, doors should open more easily. Then, the most difficult aspect of filmmaking can begin.

Leslie S. Osborne is a freelance writer. He is currently with TK Productions Premiere LLC

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