A NEW Source of Money for your Movies

For a while, it’s been possible to raise money for your movies via “crowd funding.” This method, most notably done via kickstarter.com or indiegogo.com, allowed you to raise money as donations or contributions. Thus, you didn’t have to report it as regular income to the IRS, and, thus, you owed no taxes on it. The donor could become involved – not as investor – in a creative activity without having to read scripts, cast actors, select directors or anything else.

It seemed as though it was a game where everyone could win. Usually, those seeking monies this way would create a “teaser trailer” for their project, often featuring interviews with themselves and their principal cast and crew. If the presentation had anything going for it, the funds often would start arriving. With kickstarter, ALL the funds you targeted would have to appear by your deadline, otherwise, you’d get none of it. With indiegogo, you’d get whatever had arrived, even if your quota weren’t achieved.

There were advantages to each. Go to their websites for more information about their rules and regulations.

Why, you might ask, would random people contribute amounts of $1 or more to projects by people whom they didn’t know? I haven’t seen a survey to tell us this for sure, but suffice it to say that: (a) since they could contribute any amount, there were no unrealistic expectations of them, and no embarrassment about ANY amount of money; (b) evidenty, a sizable amount of the U.S. public likes to feel as though they are involved with creative activities; (c) there was the promise of the “reward” (NOT return on money contributed), such as a signed copy of the resultant DVD, photos of principals, etc.

My good friend, entertainment attorney Paul Battista (battistalaw.com) is quite knowledgeable on the ins and outs of crowd funding, and I thank him for the understanding he’s given me. Now, an amazing piece of information: the new JOBS Act, signed into law on 5 April 2012, has expanded the crowd funding concept into “crowd investing.” The issuers of a crowd investment can raise up to $1 million in actual investment money, WITHOUT registering their product with the state or federal government.

Furthermore, the issuers can accept money from anyone – NOT just from “accredited investors” (this was defined as people with a net worth of $1 million or more, or who had earned $200,000 per year for the prior two years with a reasonable expectation of earning it for a third year).

This extraordinary Act has truly expanded the means of financing low budget independently produced films. I’ve been searching the internet for more information on this, and I urge you do the same. It does appear that the SEC (Securities & Exchange Commission, the Federal regulatory body for investments) has some time to rule on this and to verify the various tenets of the Act. However, if they allow it to any degree, this is truly the dawning of a new age for low budget moviemakers. Stay tuned for more developments.

I’m including information about this new and unique fund-raising concept in my consulting.

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