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The Right Way to Raise Money for a No-Budget Film

The Right Way to Raise Money for a No-Budget Film

Articles - Directing

Over the last 10 years, I’ve worked as a consultant
on independent films and as a production accountant for Universal,
Disney and HBO. I’ve also produced a “no-budget” film called The
Eden Myth,
for which I raised over $150,000. I’d like to share
with you what I know about how to raise money for a no-budget film,
which I consider to be any film made for between $1 and $200,000.

Honesty and Ethics 101

From an ethical, legal and business standpoint,
honesty should be the foundation of your business plan. Many independent
film proposals I’ve seen have been appallingly dishonest, some
promising returns in the millions. Yours will be different: you’re
going to promise investors that you’ll likely lose all of their

Since there is an excellent chance that you’ll only
be screening at festivals, most of which are equipped to screen
DV, there’s no reason to spend the money to shoot on—or transfer
to—film. Many films get stuck for years (or forever) in labs because
the moviemakers run out of money from dealing with film transfers
and processing.

For less than $10,000, you can own a complete broadcast-quality
DV rig, including audio and a G4 equipped with Final Cut Pro—a
complete no-budget studio at your permanent disposal. If your
film gets picked up for theatrical distribution, your distributor
will pay for a transfer to film. Shoot tape and tell a good story
for $20,000, and you’ll be miles ahead of any moviemaker with
a slick but boring $100,000, 35mm film—especially if their film
is stuck in a lab.

Incorporation: Yes or No?

People often ask “Should I incorporate?” A good
rule to follow is: if you’re planning to raise more than $25,000,
yes. Incorporating provides a legal separation of your personal
funds from your film’s funds, and legal protection if anyone sues
the film company (provided you yourself have not done anything
negligent or criminal). Incorporating also gives you legitimacy
and limits your contributors’ liability to the amount of money
they’ve invested. It can also offer tax advantages.

If you’re raising less than $25,000 from friends
or family members, you might feel comfortable setting up a “Doing
Business As” (DBA) account, which can usually be done with a certificate
from your local county clerk’s office. Just be advised that a
DBA does not offer protection from lawsuits, nor does it offer
any tax advantages.

The Business Plan

The best business plans I’ve seen are around 12
pages and include frequent reminders that this is an extremely
risky investment. What follows is an outline based on proposals
that have successfully raised money for no-budget films.

Pages 1–2 Introduction
and Summary

These first two pages are an “Executive Summary”
of the rest of the plan. A contributor should be able to read
these two pages and have an immediate sense of what s/he is getting
into. You should include: 1) A quick introduction to what the project is: who’s making it and how much it’s going
to cost. 2) A short and punchy synopsis of the
film. 3) A summary of the investment opportunity,
explaining the corporate structure and how monies will be distributed
if there is a profit. 4) A summary of the film’s intended
. 5) In 5 or 6 paragraphs, you should explain
your moviemaking process. Can your script be
shot quickly? Will it be shot on DV? Do you have free equipment?
What experience do you have? Who have you recruited to fill in
the gaps in your own experience?

Page 3 Include biographies of your key creative personnel such
as producer, director and director of photography.

Page 4 Take
this opportunity to flesh out the synopsis from
the introduction.

Page 5 Explain your intended production of the picture:
when and where you plan to shoot, and for how long. You should
also sketch out a post-production timetable here.

Page 6 Your budget should be broken down into four categories
that include only actual expenses. These should include: salaries
and fees (up-front costs for writer, producer, director, cast,
crew, composer, casting director and legal and accounting services);
production expenses (production office supplies, telephone bills,
film stock, catering, sets, props, costumes, location fees, cameras,
lighting and transportation); post-production expenses (editing,
music, publicity, cast and crew screening, video dubs, festival
entry fees and festival travel costs); and insurance and contingency
(a contingency is a reserve fund, usually around 15 percent of
your budget, to cover any unpredictable costs).

Page 7 This
page describes your anticipated markets and the
audience you hope will be interested in the film.

Page 8 What
is your publicity strategy? Options include film
festivals, Website reviews, favors from publicist friends, guerilla
marketing, college and special interest screenings.

Page 9 A
typical distribution approach is the classic
distribution pyramid, which starts with domestic distribution
(theatrical, home video, pay-per-view, cable) and is followed
by foreign markets. You could also include a proposal (not a promise)
to self-distribute, if you think it’s a possibility.

Page 10 This
is where you will explain the funding of the picture,
or the legal and business structure of your company. Let potential
contributors know what sort of corporation you have formed and
what state you’ve formed it in. Let them know how much you plan
to raise, and at what level you will begin shooting. If you plan
to raise $85,000, but only need $60,000 to get through principal
photography, there’s no reason not to start shooting when you
have $60,000—but let your contributors know that this is your

Include an anticipated total of deferred expenses
(any expense that will not be paid until the film generates income).

If you plan to invest personally, you should mention
that here. While by no means a requirement, it demonstrates your
commitment to the project if you are invested both artistically and financially.

You should also explain what will happen in the
event of generating a profit.

The last thing you should include on this page is
a dire warning as to why this should be looked at as a contribution
rather than an investment.

Page 11 Your deferred expenses can be roughly broken down
into cast, crew, post-production and miscellaneous (which would
include music clearances, location fees and anything else you
have yet to determine). You should state that deferred amounts
could vary based on the actual needs of the production.

Page 12 Give
a profit participation sample, where you explain
how money from a sale would be distributed. This page should state
that these are purely hypothetical numbers and are not intended
to represent the actual sale or profit of the film.

Final Thoughts

Don’t buy fancy paper, make corporate stationery,
use FedEx or otherwise waste money that belongs on the screen.
You’re not fooling anyone if you pretend you are doing anything
other than making an incredibly cheap movie for the hell of it,
so don’t spend your precious dollars on anything but essentials.
Go to your local office supply store and purchase some glossy
folders: they look nice, are cheap and have two pockets—one for
your business plan and one for your supporting materials (photos,
relevant articles, etc.).

Finally, make sure that all agreements are in writing,
including your own agreement on how you will be compensated. Make
one-page agreements with your contributors that explain the investment
structure and include a statement to the effect that they understand
they will lose their investment. You should also have written
agreements with your cast and crew that spell out what they will
be paid during production and what their deferred pay will be.

Raising money for an independent film is not easy.
But with patience and determination you will do it. Be diligent,
attentive and honest and you will be well on your way to making
a film that you and your team will be proud of. Now go raise some
money and make a good movie. MM

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