Article by: Coop Cooper
A.K.A. The Small Town Critic
For filmmakers, one of the most difficult parts of the experience is raising the money. This is especially true for independent filmmakers where this responsibility rests on the shoulders of the creators themselves. Until recently, grass roots fundraising, interest from production companies, paying for it out-of-pocket and the occasional publicity stunt were the only ways of generating the money to fund a film project. Now the budding phenomenon of “crowd funding” gives filmmakers and entrepreneurs a new resource for generating startup cash.
I first came across Kickstarter.com directly after the iPhone 4 was released in 2010. I read an article about two enterprising inventors who had come up with a ridiculously simple widget that would act as both a viewing stand and a tripod mount for the highly coveted smartphone. This product called the “Glif” was tiny and easy to reproduce, but the creators needed funds in order to mass produce it. They began a campaign on Kickstarter, promoted it using an informative video and asked for donations after setting a modest goal of $10,000. Technology blogs caught wind of the project and promoted it by writing about how this simple, yet ingenious idea could be a hit. The blogs were right and the inventors received over $137,417 in donations, over ten times what they asked for.
The independent sci-fi comedy “Iron Sky” in which space Nazis from the moon invade the Earth is an example of a successful Kickstarter film campaign. It raised 900,000 Euros through crowd funding and the rest of its 7.5 million Euro budget through traditional channels. Despite ambitious special effects, the film has received lackluster reviews, but remains a clear example of the power of crowd funding.
The way these crowd funding sites make a profit is by taking a precentange of the donations. Some take a higher overall cut (ex. Kickstarter takes 5%), while others take a lower cut (Indiegogo.com 4%), while charging an extra fee for the credit card processing (3% per transaction). There are specific limits set for various sites, but there is always at least one big catch. For instance, if a Kickstarter project does not meet its minimum goal, the funds are completely refunded to the donors and the entrepreneur gets nothing. Indiegogo is a bit more forgiving in that if the goal is not reached, the project still gets the majority of the donations, but the site takes a hefty 9% on top of the credit card processing fees. While this seems like a safer option, Kickstarter has the brand name recognition and its users get more exposure from random donors browsing the site.
The donors get rewards as well. If the project is a tangible item, donors who give enough will receive that item upon its completion. If the project is a film, the donors can receive promotional materials such as DVDs, signed scripts, posters or even a “Special Thanks” in the end credits. An “Executive Producer” credit (or the appropriate equivalent) is often the reward reserved for the highest donors; however, the biggest reward is in helping to create a product that could win awards or become wildly successful. Some sites even offer tax write-offs for donors.
A few problems exist with this new phenomenon. Although projects are vetted and approved by site administrators, there have been allegations of fraud in which the project creators have taken donor money without the intention of creating a product. Critics of crowd funding are afraid that over-saturation and abuse of these sites will discourage the masses from donating. There is also a push to allow donors to actually invest in projects with an expectation of a monetary return. This prospect was considered risky and legally shaky until the U.S. Congress recently passed laws that will help legalize and regulate such ventures.
I have personally donated to several projects that I felt were important enough to support. Whether you know the project creator or not, it’s a very small risk to help a project that appears worthwhile. Better yet, when you begin your own crowd funding project (like mine for my short film GOD MAKER), you may have a handful of grateful entrepreneurs more than willing to return the favor.