Raising private equity is extremely difficult, grants are scarce, and crowdfunding is a highly competitive landscape. But there is a unicorn off in the distance that may work for your next project. Hear me out...
Several years ago, I shot a short doc covering a complex and emotionally charged social issue. I then worked with the subjects of the doc and obtained the rights for the development of a dramatic feature adaptation of their story. The resulting script garnered several awards and a lot of buzz, but the buzz is where it stopped.Dramas are tough to pitch and produce. Social issue indie dramas... Even tougher. The evidence for a fiscal return on dramatic features without an A-list star attached is scarce. There are outliers of course, but any equity investor worth their weight that isn't your great aunt will want to see a clear path. Hell, for my project, I even had partial funding and a BAFTA-winning lead attached, but the thing just dissolved.
"Why not partner with a non-profit?" people would eagerly suggest. If I heard it once, I heard it a thousand times. Sure, it makes sense in theory. Like minds, an aligned vision... what could go wrong? In my experience, most NP's that I met with couldn't see the value in a small indie drama as a way to promote their agenda. Trust me... I tried every conceivable angle, but in the end... non-profits are very protective of their donor base and of every dollar they bring in. There's virtually no room for a "roll of the dice."
But, just as I was hanging up my spurs on this project, I heard about a fiscal sponsorship opportunity through my local film society. Here's how it worked for me...
• My local Film Society is a registered 501 (c) (3) with a stated mission to promote and grow the local film ecosystem.
• They offer an avenue for filmmakers to partner with them and use their non-profit status to solicit donations to the film society on behalf of the sponsored project. Meaning, Someone interested in making a tax-deductable donation to a film project can do so through the film society.
• The donor gets the tax write off, the film society takes an admin fee of 6% from every donation, and the remainder is kept in escrow for eventual withdraw and use by the filmmaker to make their project. It's that simple.
Of course the film project must exist as a registered LLC with the state and any moneys withdrawn for the project in any given year will be taxed, but if you follow the rules and make fundraising a mission, you could just raise enough to put your script on the screen. Plus... and this is the best part... there are no investors with whom you need to split profits (providing you make a great film and distribute effectively).
In complete transparency, I raised just under $10K in donations through the fiscal sponsorship agreement without a ton of effort. I have a couple of other big projects that have now taken precedent but I plan to relaunch this campaign and will of course keep you all posted on the progress.
So, do any of you have experience with a fiscal sponsor? Let us know in the comments below. Success stories are the best stories!
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Michael Fitzer, MFA I read your post about using a fiscal sponsorship for your film project and see a few red flags...
Charitable Purpose
The nonprofit’s mission is described as to: “promote and grow the local film ecosystem.” How does that qualify as a recognized charitable purpose under IRS rules? Local where?
Specifically, how does this mission ensure a public benefit, rather than primarily supporting private filmmakers or investors?
Public Benefit in Practice
Can you give examples of specific activities or outputs that demonstrate this mission actually benefits the public?
Donor Transparency / Expectations
How are donors informed about what types of projects their contributions might support?
How do you ensure donors understand that funds could theoretically be used for any type of film project, given the broad mission statement?
Tax Implications for the LLC
You mention that the LLC pays taxes on funds received. While that addresses income tax concerns, how does this arrangement still satisfy the IRS requirement that the nonprofit advance a charitable purpose?
Essentially, paying taxes does not automatically make the activity charitable — how is that being addressed?
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Kenneth George, thanks for your note.
People much smarter than I am set up this program in my area and it has been in operation for more than a decade. I'm sure they have ironed out all the kinks.
Because I am not running the non-profit, most of these are questions I cannot answer. If you have concerns, you could probably contact your local film office to see if there is an org in your area offering a fiscal sponsorship program to answer what I cannot.
I can tell you that, as far as donor transparency and expectations are concerned, every donor chooses which project they want to support. They are given the necessary tax paperwork by the non-profit, but again, my knowledge of their inner workings only goes so far. Lawyers and accountants all vetted this long before I got involved with my project.
If you don't believe this is an avenue you want to explore for your upcoming projects I certainly understand. I'm just sharing my nominal success with this method.
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Michael Fitzer, MFA It’s not something I was considering; I just noticed several issues with what you described. By the way, what’s the name of the nonprofit? Any of the questions I asked could easily be conveyed to them if you genuinely wanted to get to the bottom of things.
I’m fairly familiar with how nonprofits operate — or at least how they’re supposed to. In the context of a fiscal sponsorship, the structure is typically a re-granting model, which doesn’t quite match what you described.
If the nonprofit you mentioned is actually acting just as a medium the funnel donations to for-profit LLCs for commercial filmmaking, that could seriously jeopardize its nonprofit status - and that is at the very least. So let’s start with the name of the organization in question, and we can figure out the rest from there.