Fundraising

[Chamber005]

So I haven't decided exactly how I want to go about doing this. I've teamed up with some super-duper uber talented multiple-award winning indie producer and director folks (booya!) in an effort to start raising money for their next feature.

As some of you know, while I have my own project going on (which is already funded by myself and some super awesome associates of mine), I've been really excited about getting my feet wet in the co-producer/fundraising arena on other films in a strictly business capacity. I have a firm belief regarding keeping business and artistic ventures separate, and if I can slowly progress in the business of film while using the rest of my time actually filmmaking, maybe in five years or so the two aspects of myself will be able to benefit from one another. Right now I deal strictly in finance, which while seeming related, has absolutely NOTHING to do with being a producer/fundraiser on a film. No matter my financial experience, really only my skillset as a salesperson will be of any value (and, honestly, there is no garauntee that my skillset will easily transfer to fundraising/private equity capturing).

I'm not sure if I want to do something in the way of a blog or if I want to just post some random things here, but I know I'll need to do something as I've made it a firm stance to the producers et al involved that I they cannot be my confidants. This is going to be extremely exhausting and demoralizing work (and, remember, although I've gotten to the point to where I work from home in my own business, I do still have work to do that is vital to my basic livelihood). so I'll need to vent somewhere when the rocks start to tumble, limbs snap and balls are up in my throat. This is literally for me like taking a leap ten years into my past -- and those were some rough times for me business-wise.

But the first order of business is not private equity. I cannot imagine anything more pointless as I've already made a point to the producers that I will not use anyone who is in anyway a personal associate of mine. Money friends are friends to my OWN productions. No way are they going to be risked on my education. So for private equity, when/if I do cross that bridge, we're talking about people on the fringes of my social circle, people who may have been douchebags (but douchebags with money) or maybe people who I simply had no interest in maintaining a relationship with in any regard but who I feel might have the extra cash lying around to invest. But that is long term. You don't approach private equity without some real seasoned sales skills in selling the actual thing that you're selling.

The first order of business then will be fundraising. Now it would be easy for me to jump the gun and instantly outsource 20 guys in India and get them on this, but that would be insane as I've no idea what works and what doesn't. A pitch is something so specific, so refined that it takes hundreds of initial contacts in order to hone. Think of a samurai edging a sword, right? Same thing.

And obviously there are some legalities, though it's been difficult so far to really focus in on the legality that I'm looking for specifically. Right now it looks like to raise money for a charity you have to grab a professional fundraiser license in your state plus a 10K surety bond. Both of those are easy, but I'm not positive that I need them. I'm also not sure that each state's license crosses each state -- e.g., if I can raise money in Illinois can I also do so in California or do I need a separate license? One of the producers was talking about a non-profit association which would allow doners (and, I believe, investors) tax benefits, but that hasn't been solidified yet. But it appears that if the film's production does move into a non-profit territory I will have to obtain a license -- which, again is fine and I'm sure something I would eventually want when fundraising for the next film and the next, especially if they're non-profit documentaries, etc. Being licensed is always going to be better for you in the long run, and being bonded is great regardless of whatever money business you might be in.

I see my personal business career path in the long term moving away from finance and focusing more on film fundraising (and potentially some marginal film producing, though I have little interest in the middle ground but moreso for the front and backend sales aspects of the films' marketing).

So, for me, painful as it is, all of this starts with one guy, a dedicated business phone line for the production, and a DNC scrubbed list of potential doners. Just a simple pitch and catch, guiding them to the designated donation website and its paypal follow-thru. I won't go into the specifics of the budget because it's unmanageable if I personally took on the entire brunt of the task (especially without investor inclusion). So my thought process is that I'll set extremely manageable goals for myself. Since we're potentially going to be setting up a tier-based donation structure (e.g. $50 gets you this at silver status, $100 gets you this at gold status, $1000 gets you this at platinum status), I'll probably set my goals at $1000 increments with a "grand goal" of $20,000. Reaching a "grand goal", for me, means that I would then be able to progress my tactics and move forward in the process, whatever that means.

What's great about donations, though, is that it is 100% profit for the producers -- no paperwork, no complicated share-based structure. And what's great about my involvement is that I'm 100% commission (and credit) on this thing. I'm 100% commission on the doner side, and I gain shares in the company on the investor side.

In a perfect world I would think that donations could make up a large portion of the film's budget and a SINGLE investor would make up the rest. If there's one thing I know about real estate it's that rich people do not buy timeshares. Maybe rich people investing in low budget films are different, but I have a suspicion that they're not. I feel that if we can account for a lot of "free money", it makes the case to the investor that much stronger -- not only that you were able to raise X amount of dollars thus proving your company's tenacity, but also that the investor's involvement is then a personal one and all the film's success is his (and the producers').

Most people will say it's easier to get 10K here, 20K there, but I think that's more true with friends and family (as is in my case) and is not necessarily true in the business of film (at least outside of California).

So like I said, I'll either keep people up to date here, or I'll do a blog or something and just post link updates. Whichever I'm more comfortable with.

But yeah, still a couple weeks off I think from the Start line, but I think it's going to be an interesting journey in business (a horribly challenging journey, but still a journey worth taking!)

Please keep all comments in a relatively positive vein. If I promoted any personal perspective that you don't agree with please ignore it as it was not intended to offend anyone or to spark any philosophical debates. I'm hoping that this can be an all-inclusive, enlightening and positive thread regarding the business of fundraising and equity sponsorship for films. Thanks!!

 

[Mark Harris]

you're welcome.

 

[MichaelP]

I think it will be a challenge to balance "donations" versus actual investment for investors looking to (or hoping) to get a return on the project plus a profit. Donating $10K is a pretty generous deal - is it tax deductible? If I donate to a recognized charity it is. How do you plan to do a for profit venture that way?

Do you have a business plan in place for the project itself? What is your revenue plan for the type of film it will be? Award winning producers and directors are all good starts, since it reduces overall risk with knowledgeable talent, but from an investor's point of view, what is the cash flow and revenue against the investment look like? And what is the total investment of the project itself?

Michael

 

[Chamber005]

I think it will be a challenge to balance "donations" versus actual investment for investors looking to (or hoping) to get a return on the project plus a profit. Donating $10K is a pretty generous deal - is it tax deductible? If I donate to a recognized charity it is. How do you plan to do a for profit venture that way?

Do you have a business plan in place for the project itself? What is your revenue plan for the type of film it will be? Award winning producers and directors are all good starts, since it reduces overall risk with knowledgeable talent, but from an investor's point of view, what is the cash flow and revenue against the investment look like? And what is the total investment of the project itself?

Michael

So I'm supposed to keep most of the exact details hush-hush. I mean, if I talked about the budget and then it came out what the movie's budget was prior to it being sold, yadda yadda. So the deal was I could talk about what I'm doing, but I have to keep everything close to the vest. Which also means keeping a lot of the corporate structure stuff removed from my posts as well.

This is more about my plight as the fundraiser specifically, not as the producer or management team.

For general knowledge stuff, though, we're in the process of weighing out the non-profit fiscally responsible stuff with the straight investor angle with small, individual donations.

So right now the talks are about non-profit vs commercial structure. As I understand it the fiscally responsible non-profit structure can still be a for-profit venture so long as the asset collection for the production was gathered in a non-investor capacity (e.g. doners, grants, personal funds, etc). That's filtered down to me from on high, though, so don't quote me yet. The write offs for investors and the tax breaks for doners are obviously an aspect of those discussions, though.

If you're asking specifically about the packet and sales pitch to a potential investor, I haven't gotten to that point yet. If we indeed do go the investor route (and by that I mean the SEC/35 accredited route not "I know a guy who has a friend who has money" which could still be included under the guise of personal finance), for me it would be about first creating the education, network and further skillset in order to approach a qualified investor.

I think that's probably about as far as I can get into it on the budget/corporate side of things, though. Hope that helps!

 

[Chamber005]

you're welcome.

lol ?

 

[filmman]

It's possible to learn from any fund raising efforts; but the way I see it you're simply financing a movie by someone else to see how you want to finance your own movie. You may end up wasting your time for the most part.

A much better way for you to learn raising funds for movies is make a small budget feature film as producer. Take Nathyn Masters for example (if you like action movies). He can shoot a martial arts feature for $5000. With your help, he may be able to get the budget up to $25,000. With that kind of money, Nate will be able to go after a much bigger market.

Now, if you raised $500,000 for a movie and if it could not make its money back, you wouldn't learn very much from the experience to pursue your own dream of making a movie in five years. It's very hard to succeed with a $500,000 because you won't be able to hire a single major star for that kind of money. Without a major star there is no guarantee that the movie would play theatrical, and without a theatrical you will lose money on DVD, Blu-ray or whatever form of home video you end up with.

So, you really need to raise at least $15,000,000 to be able to sign up a single movie star to carry your movie into box office success. And even that is not a sure bet. But at least you'll be playing in the big leagues.

Good luck with your learning experiment and thank you for sharing your real estate knowledge with us, some of which is useful for any business.

 

[Chamber005]

It's possible to learn from any fund raising efforts; but the way I see it you're simply financing a movie by someone else to see how you want to finance your own movie. You may end up wasting your time for the most part.

A much better way for you to learn raising funds for movies is make a small budget feature film as producer. Take Nathyn Masters for example (if you like action movies). He can shoot a martial arts feature for $5000. With your help, he may be able to get the budget up to $25,000. With that kind of money, Nate will be able to go after a much bigger market.

Now, if you raised $500,000 for a movie and if it could not make its money back, you wouldn't learn very much from the experience to pursue your own dream of making a movie in five years. It's very hard to succeed with a $500,000 because you won't be able to hire a single major star for that kind of money. Without a major star there is no guarantee that the movie would play theatrical, and without a theatrical you will lose money on DVD, Blu-ray or whatever form of home video you end up with.

So, you really need to raise at least $15,000,000 to be able to sign up a single movie star to carry your movie into box office success. And even that is not a sure bet. But at least you'll be playing in the big leagues.

Good luck with your learning experiment and thank you for sharing your real estate knowledge with us, some of which is useful for any business.

Well I have quite a few reasons as to why I'm working with the people on the project that I'm working on. Somewhere on the list might be to "learn how to do it on my own project", but honestly it really is a separate thing for me.

I don't need to fundraise for my current project, so I'm doing it on someone else's who I respect and who I think I can learn a lot from on a project that I feel could be at least marginally successful in its budget range. This is my skillset and I have loads of time to implement it.

You're saying it makes more sense to learn how to produce a film by executive producing it, but honestly I'm not all that interested in executive producing. That involves a whole lot of boring-a$$ detail work that detail-oriented folks like to deal with. When it comes to learning a new craft in business, I'd much rather exist as the soldier, not immediately as the general, especially since this is a SECONDARY job for me and not my primary life's ambition.

And just as an aside and having nothing to do with the project I'm working on, I don't really agree with your figures. When you're talking about low-budget features there are a million variables regarding whether or not it is successful, and a movie star and whether or not it plays in theatres is only a couple of those variables.

I'm deeply satisfied with the decision I made and feel that there is certainly the possibilty for some moderate success in the film's budget range (but of course I feel that way as I'm associated with the thing).

But again, I'd like this thread to be more about encouraging each other on our decisions in marketing and maybe even discussing what we're enjoying (or hating doing) in our own fundraiser/investor capacities.

 

[filmman]

Well, yes, we want to learn and encourage each other, for sure. But, as you indicate, we don't have to agree. It is better to be clear where we don't agree with regard to how much money to invest in a certain type of movie.

It's possible to learn a lot by comparing movies and budgets and what stars they used. This is done a lot on studio level, but we indies don't get the real figures very often, because we work with small money and we can't hype like the majors do.

Waterworld was done for $400,000,000 as I remember and Titanic was done for $500,000,000. If those were indie movies, the budgets would be much lower. Don't you agree?

If you had to finance Waterworld, what would you budget? We can have discussions about hypothetical matters without getting upset.

When I started out I didn't know how to keep budgets low. That's a problem I see other indies having. I've seen it on this board.

Of course, sometimes you have to claim that the movie was done for two or three times more than what you actually spent, but that's just so you don't get low-balled by distributors.

The thing to remember is that the talent you hire will determine what your budget will be. If you have a SAG feature with four speaking parts, you can keep the budget low, as low as $250,000.

If you have a SAG feature with 30 speaking parts, your budget will be well over a million just for your SAG talent. You have to put in a bigger deposit.

Once you go over $500,000 and some of the money is coming from banks or distribution guarantees, you have to have a completion bond, liability insurance, trailers, catering, etc. etc. etc. You'd be surprised how easy it is for you to go over a million.

If the movie doesn't recoup, you could be out of the movie business.

As an indie, you have to be sure you're going to recoup. I've been making movies for 40 years. I'm a graduate of the San Francisco State University Film Department; I'm not going to put myself out of business now.LOL

I play for keeps. When I make a movie, I make sure I recoup. That means there is no time for "learning". But, here is the funny thing, I still learn every day, and I'm learning from you. Maybe you'll teach me another way not to lose money and not achieve my goals with a certain movie, but that's not "negative." I appreciate the discussion, and if I can contribute even if it sounds I'm being negative, I want to do that. I'm not being negative.

Hype plays a big role in promoting movies -- even here on this board, the threads that get the most visitors are the ones that hype a certain type of filmmaking. We lost two of the best threads on this board at the end because they hype got out of hand and it was no longer PR but just a debate on how to cast and how to make film. Too bad because the only way to assess a movie is in its distribution phase.

The only movie thread I've read about on this board that went the distance is the Christian theme movie with the long title. The movie is being distributed by a mini-major and the investors it seems have already recouped; but I don't think they're making millions yet. I wished them luck, and I appreciated the fact they shared up until now. They still haven't answered the question: how much did they get paid in advance?

 

[Chamber005]

Well, yes, we want to learn and encourage each other, for sure. But, as you indicate, we don't have to agree. It is better to be clear where we don't agree with regard to how much money to invest in a certain type of movie.

It's possible to learn a lot by comparing movies and budgets and what stars they used. This is done a lot on studio level, but we indies don't get the real figures very often, because we work with small money and we can't hype like the majors do.

Waterworld was done for $400,000,000 as I remember and Titanic was done for $500,000,000. If those were indie movies, the budgets would be much lower. Don't you agree?

If you had to finance Waterworld, what would you budget? We can have discussions about hypothetical matters without getting upset.

When I started out I didn't know how to keep budgets low. That's a problem I see other indies having. I've seen it on this board.

Of course, sometimes you have to claim that the movie was done for two or three times more than what you actually spent, but that's just so you don't get low-balled by distributors.

The thing to remember is that the talent you hire will determine what your budget will be. If you have a SAG feature with four speaking parts, you can keep the budget low, as low as $250,000.

If you have a SAG feature with 30 speaking parts, your budget will be well over a million just for your SAG talent. You have to put in a bigger deposit.

Once you go over $500,000 and some of the money is coming from banks or distribution guarantees, you have to have a completion bond, liability insurance, trailers, catering, etc. etc. etc. You'd be surprised how easy it is for you to go over a million.

If the movie doesn't recoup, you could be out of the movie business.

As an indie, you have to be sure you're going to recoup. I've been making movies for 40 years. I'm a graduate of the San Francisco State University Film Department; I'm not going to put myself out of business now.LOL

I play for keeps. When I make a movie, I make sure I recoup. That means there is no time for "learning". But, here is the funny thing, I still learn every day, and I'm learning from you. Maybe you'll teach me another way not to lose money and not achieve my goals with a certain movie, but that's not "negative." I appreciate the discussion, and if I can contribute even if it sounds I'm being negative, I want to do that. I'm not being negative.

Hype plays a big role in promoting movies -- even here on this board, the threads that get the most visitors are the ones that hype a certain type of filmmaking. We lost two of the best threads on this board at the end because they hype got out of hand and it was no longer PR but just a debate on how to cast and how to make film. Too bad because the only way to assess a movie is in its distribution phase.

The only movie thread I've read about on this board that went the distance is the Christian theme movie with the long title. The movie is being distributed by a mini-major and the investors it seems have already recouped; but I don't think they're making millions yet. I wished them luck, and I appreciated the fact they shared up until now. They still haven't answered the question: how much did they get paid in advance?

Yeah, didn't mean to imply that you were being negative.

I feel like your points are straying a little bit from the point, though. You're still talking about producing, not fundraising.

Regardless of what a budget is on a film, the act of fundraising and/or obtaining investors is going to entail is similar set of procedures.

My intention with this thread is for us to talk about fundraising specifically, though, as I think that pertains directly to the low/micro-budget filmmaker.

Corporate structures and budgets are separate issues that are far more easily dissected.

And isn't the hot rod movie thread still going on? I can't imagine she would have let it die!

 

[filmman]

My intention with this thread is for us to talk about fundraising specifically, though, as I think that pertains directly to the low/micro-budget filmmaker.

Ok, I'm very interested in low budget fund raising techniques, because I'm about to do it for a worthwhile project coming up very soon.

Micro budget fund raising though is a bit ridiculous, don't you think? I mean, what is a micro budget? $225? If the budget is so small, it's best to just ask people to donate the MiniDV tapes and loan the camera for a weekend or something. Sandwiches and water, ok. One week shoot. What's left of the $225 should be used to throw a rap party at Dominos Pizza?

But seriously, how do I ask a millionaire for a $50,000 investment in a movie that is worthwhile and has the potential to make about $5 million?

Now, an accredited investor according to SEC rules used to be: an individual who had $1 million in assets and $200,000 in cash. I think this must have changed though. It was over ten years ago when I last looked into this.

I wonder what was Bernie Madoff's criteria for accepting investor monies? He was two-time president of NASDAQ so he must have played by the rules at some point.

So the SEC rules say you have to know someone well before you can ask them for investment and they have to do due-diligence; they have to be accredited investors too.

If you don't know millionaires, you're out of luck. You have to be a millionaire to know millionaires, so maybe one should throw a party and invite millionaires. I don't know if that's legal though.

Perhaps it's legal to present potential investors with a questionnaire to qualify them as accredited investors. Do they have such letter templates?

 

[Chamber005]

Ok, I'm very interested in low budget fund raising techniques, because I'm about to do it for a worthwhile project coming up very soon.

Micro budget fund raising though is a bit ridiculous, don't you think? I mean, what is a micro budget? $225? If the budget is so small, it's best to just ask people to donate the MiniDV tapes and loan the camera for a weekend or something. Sandwiches and water, ok. One week shoot. What's left of the $225 should be used to throw a rap party at Dominos Pizza?

But seriously, how do I ask a millionaire for a $50,000 investment in a movie that is worthwhile and has the potential to make about $5 million?

Now, an accredited investor according to SEC rules used to be: an individual who had $1 million in assets and $200,000 in cash. I think this must have changed though. It was over ten years ago when I last looked into this.

I wonder what was Bernie Madoff's criteria for accepting investor monies? He was two-time president of NASDAQ so he must have played by the rules at some point.

So the SEC rules say you have to know someone well before you can ask them for investment and they have to do due-diligence; they have to be accredited investors too.

If you don't know millionaires, you're out of luck. You have to be a millionaire to know millionaires, so maybe one should throw a party and invite millionaires. I don't know if that's legal though.

Perhaps it's legal to present potential investors with a questionnaire to qualify them as accredited investors. Do they have such letter templates?

An easy place to start with money people is the same place you would start with non money people -- ask them about how they do what it is they do. If you approached someone you knew to be a janitor and asked them how they got to be a janitor, do you think they'd have a problem telling you their story?

Everyone has a story and most people would like to tell it to you.

So let's say you worked for a guy, a money guy, someone who owned a video store you worked at or a law firm you temp'ed at, etc. Why not send that person a note or an email or give them a call and tell them that you're getting into the fundraising business and are looking to talk to other successful entrepreneurs about how to run a successful business.

That way you're not asking anyone with money to invest, but maybe you get to spend some time around money people. If you're especially likable and they feel a desire to help you further your network of successful business folk (from which to "learn"), maybe they invite you to something where other successful people are or give you a name of a friend of theirs who they feel may be able to help you.

"Fundraiser" is such a perfect title to wear when trying to meet money. Especially if you talk to money about being in the business of fundraising. Money people don't hate fundraisers. Typically people will ASSUME that being a fundraiser means that you are necessarily in league with a non-profit -- or, as your plight may be to become a successful fundraiser, what you would be raising funds for would be a non-profit, see?

And just to clear up micro vs low budget, I consider micro to be 50K or less. Between 50-1mil is low budget. Anything over a mil is not low budget IMO.

But to your specific question (which, honestly, I have no real time experience in asking as I've never had to do it personally), "How do I ask a millionaire to invest 50K?" Coming from a strictly Chicago POV, I absolutely would never ask anyone to invest anything in any project I am personally doing or am sponsoring. I would wait for them to ask me. When you're talking about investing you either have other, professional people with connections who are working on some sort of finder's fee/commission base ask people for you, or you do the kinds of things I just mentioned and sit yourself down around a bunch of money and simply talk about what it is you're doing.

If you think about it in Big Kahuna terms (written by a local guy just down the street here), every single conversation in sales is being managed by one person or the other. The conversation doesn't ever just happen to end up somewhere -- either you led the conversation there or the other guy did. So if you're around big money and you find yourself in a conversation about your favorite kind of pizza, that's your fault, you brought yourself there. If you're talking about his favorite kind of pizza, that's fine, that may just be a detour on your way to guiding things towards your eventual goal which is talking about whatever it is that is MOST IMPORTANT to you which, in that situation, would be whatever it is you're selling. During the course of a sale, I don't care if it's a 5 hour conversation, what you are there to do, what you are there to SELL should always be what is MOST IMPORTANT to you. Not your woman, not your happiness or religion, only what you have to sell. Doesn't mean you should EVER try to actually sell it, just means that it should be closest to your heart in the heat of a sale. Same way a guy in war will get through war thinking about the reasons he's fighting that war. You can't fake importance or devotion, certainly not to big money. So all your devotion and commitment should be focused on what is most dear to your heart (e.g. what's for sale) when you're in that room -- assuming you can get in the room.

When my friends and I were younger we used to sneak into rich people's shindigs just to be seated around rich people. And the weirdest thing is we usually ended up being the life of the party. A broke person in a rich party is like a straight person in a gay bar, they might stick out, but everyone is usually INTERESTED -- and are sometimes even intrigued.

So, honestly, go stand around a bunch of rich people. If you don't have any reason why not to, go stand around rich people every single night. Seek out free information from successful people in person. Tell them that you just got licensed as a fundraiser and are starting your own business and would like to know how they SO SUCCESSFULLY created their own business or operate their franchise, whatever. Talk to you dentist, the local bar owner. Heck talk to the guy who runs the hot dog stand. Maybe you know a few people who know some people who wouldn't mind referring you to someone who owns something. These are all successful self-starters who of course can provide invaluable insight but who also might know someone or might themselves someday want to invest in or buy whatever it is you're selling.

It sounds bizarre, but I actually practice this all the time with people I know who either don't have money or who I'd never dream of asking for investments (like my mom -- an extremely successful entrepreneur). I'll actually think to myself, "Okay, this is going to be a sales conversation" and I'll see how well I can guide the conversation, see if I can get the person to say the kinds of things I would need them to say in the next moment and the next until I eventually get them to bring up what I would want an investor to bring up. The key is to learn how to have other people say what you want them to say without the generic "So, what have you been up to?" coming into play. Responding to that kind of bland inquery only dulls your skills. When practicing on people you should avoid answering those kinds of questions in any detail and should instead slowly urge the person to bring up specifically what is closest to your heart in that moment.

So, usually, if I'm talking to my best friends about life, I'll find them asking me lots of questions about my relationship and the happiness therein. Why? Because in natural terms that is what is closet to my heart. If I move my relationship aside and put Batman as being the closest thing to my heart, I'll get questions in the vicinity of Batman, see?

But whatever or however you do it, the most important factor in all of this is people. The more people you talk to, the more names you can gather, the more contacts you can make, the more chances you have at closing.

So, the long answer then.

 

[filmman]

hey, you could be writing this as a book Thanks, Chamber~ I'll try my hand next time I see someone who has money written all over him ... or her.

 

[Chamber005]

hey, you could be writing this as a book Thanks, Chamber~ I'll try my hand next time I see someone who has money written all over him ... or her.

LOL

I am actually writing a book, but it has nothing to do with the creative process or filmmaking. Maybe someday.

I think if you write a book about something you have to be able to cite real world PROVEN examples. I have lots of things with PROVEN examples in my life that I'm writing about (both in business and otherwise), but as a filmmaker and fundraiser I am a complete NOOB man, come on!

 

[Steve House]

I gotta say I'm totally confused by this thread. How is rasing money to fund a movie the producers hope will be profitable in any way similar to soliciting donations as a fundraiser for a charity? (Other than the basic fact that both are seeking to raise money.) Not actually coming out and calling it soliciting for investment in a for-profit private venture doesn't mean that's not what it really is and I think the investment regulatory agencies are going to see it that way. Should a contributor get disgruntled I'd bet the courts would see it that way also. I'm reminded of these "gifting circles" that have popped up in recent years and when push comes to shove, labelling the money changing hands as a "gift" or a "donation" is not sufficient to make it so in the eyes of the law, much the chagrin of those who have been caught up in some of these "plans." An outright gift with no expectation of return is one thing, but if there is any expectation or suggestion that there will or may be an eventual return you're gonna come under the scrutiny of the regulators. What am I missing?

 

[Chamber005]

I gotta say I'm totally confused by this thread. How is rasing money to fund a movie the producers hope will be profitable in any way similar to soliciting donations as a fundraiser for a charity? (Other than the basic fact that both are seeking to raise money.) Not actually coming out and calling it soliciting for investment in a for-profit private venture doesn't mean that's not what it really is and I think the investment regulatory agencies are going to see it that way. Should a contributor get disgruntled I'd bet the courts would see it that way also. I'm reminded of these "gifting circles" that have popped up in recent years and when push comes to shove, labelling the money changing hands as a "gift" or a "donation" is not sufficient to make it so in the eyes of the law, much the chagrin of those who have been caught up in some of these "plans." An outright gift with no expectation of return is one thing, but if there is any expectation or suggestion that there will or may be an eventual return you're gonna come under the scrutiny of the regulators. What am I missing?

You're probably just missing the corporate structure side of things, which I'm not really addressing here. It has to do with fiscal sponsorship, etc.

What intrigues me about the for-profit "donations" people typically solicit in indie film and public broadcasting, (the typical tier model of, say, "giving away" a DVD or a T-shirt and referring to the price of purchase as a "donation") is, IMO, really stretching the meaning of the phrase. You're not donating something in that case, you're purchasing something.

Like you said, a gift is a gift. If there is ANY expectation of getting something in return (in what legalese could be called a "consideration"), then you're not asking for donations free and clear, you're asking if they want to buy a DVD for 100 bucks.

But yeah, read up on fiscal sponsorship. That should get you pointed in the right direction regarding tax deductions, non-from-for-profit created productions, non-involvement of SEC regs as they pertain to your corporation (or, more typically, you as the individual filmmaker in a position of fiscal sponsorship) etc.

But like I said, that's all upper management stuff. The brass tacks of fundraising and investor-relations strategies are what's on the menu here.

 

[shutterspeedfilms]

So the SEC rules say you have to know someone well before you can ask them for investment and they have to do due-diligence; they have to be accredited investors too.

Maybe after all the illegal file torrenters are finally rounded up, the law can finally turn its attention to the gazillion micro-budget filmmakers who are presently skirting these kinds of SEC regulations. :grin:

 

[filmman]

Bob Dylan has a line that goes like this:

There is no success like failure
and failure is no success at all

 

[Chamber005]

Maybe after all the illegal file torrenters are finally rounded up, the law can finally turn its attention to the gazillion micro-budget filmmakers who are presently skirting these kinds of SEC regulations. :grin:

Truly. The leeway is immense. I think the key is to never truly "generally solicit" if you're a filmmaker. If you take out an ad in the paper asking for investors, you deserve the 50 dollar fine.