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18 September 2018
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The financial lowdown

How can you fund, produce and distribute a film for under a million dollars? Jane Corden tells all.

Of the 60 Australian films shot between July 2000 and June 2003, 18 per cent had budgets under $1 million. All films are funded from a combination of pre-sales or distribution guarantees, government funding and private investment.*

In the low budget range it's even harder to get a distribution guarantee or presale and many filmmakers rely on a sale once the project is complete. This excludes the possibility of FFC funding and puts these low budget films more in the domain of the AFC, SBSi and state film offices who have specific funding initiatives for low budget categories. Films financed under the 50-minute SBSi/AFC program, can achieve distribution in either TV or theatrical form (as part of a two month film festival travelling to the major cities of Australia).

Private investment usually forms a significant part of the funding at this end of the budget range. Recent examples include Josh Jarman, which was privately funded in total, and Undead, which was self financed. These options require an incredible amount of passion, marketing skills and endurance, but the process can be enhanced by a sound business plan that incorporates an understanding of the tax deductibility of any private investment under either 10B, 10BA, or general business provisions.

A very common form of additional funding in the low budget arena involves deferrals. For emerging filmmakers, taking the step from shorts to features is a career building opportunity that justifies some level of investment in oneself, so it's important to accept that a low budget feature probably won't pay big fees. But in the event that it 'does an Undead' - which has sold in thirty countries to date - filmmakers should put deferral contracts in place that will ensure recognition at the earliest point negotiable. This is also a means of getting higher profile or more experienced talent than the budget can afford with crew, cast, facilities and equipment.

But funding at all budget levels is being forced to become more and more creative. In South Africa recently I encountered a filmmaker raising production finance by pre-selling tickets for his film. An activist from anti-Apartheid days, he had a message to put out, and had managed to raise half his budget of US$500,000 and market the film before it was even made.

Here is an example of an achievable million dollar budget. Achievable is the key word as this is a generic budget and its achievability is dependant on all the elements of the package:

Above Line 150,000
Crew 300,000
Cast 100,000
Music 50,000
Art, Locations, Wardrobe 75,000
Lab and Post 100,000
Equipment 80,000
Office 60,000
Insurance 30,000
Finance and Legal 25,000
Completion Guarantee 30,000

Total Budget 1,000,000

The schedule:

Better than Sex was shot in four weeks, You Can't Stop the Murders in six. Low budgets are extremely stretched by a six week shoot, but a schedule is determined by the script not the availability of funds. Many filmmakers who decide to make a low budget feature write a script to fit the budget. This is highly advisable at this end of the spectrum. 18 days of the 20-day schedule for Better than Sex were spent shooting in the same inner city warehouse apartment that housed their production office. With two main cast and fifteen 'day actors', it was a perfect example of how a low budget script with a single, manageable location can keep crew numbers, moves and setups down, as well as minimising art department expenses and film and processing costs.

A script that is too ambitious for the budget is unlikely to be funded, so cut the cloth to fit the means. Paying award minimums to a base crew of 25 over six 50-hour weeks with no overtime, and allowing for six weeks pre-production involving ten people, the minimum wage bill would be around $250,000. However, unless the director has pre-existing relationships that he or she can draw on, award minimums will not buy any experience - and it's important to the quality of the end product, as well as to staying on schedule and under budget, that a good balance of experienced personnel be factored in.

If no rights are prepaid, the minimum daily rate for an actor is $200 and minimum weekly rate is $700. If there is a distributor in place or government funding there will be a requirement to pre-buy rights, which will put the eight hour daily and forty hour weekly rates up to $500 and $1550 respectively (assuming no overtime and without considering superannuation). Therefore a $100,000 budget will buy ten actors for six weeks with $7,000 left over for post sync and rehearsals. If rights are not pre-purchased they will cost double, but become a cost of distribution. If there is no pre-sale in place or government funding this may be an option.

Close to 10% of your budget is not on the screen, but covers finance, legal expenses and insurance. The completion guarantor is the security for your investors, They ensure that the film will be completed and the investors have an end product for distribution. No government body will invest in a film without a completion guarantor; nor will a distributor commit to a film without one. And no private investor would be advised to put money in to a film not bonded.

Insurance cannot be skimped when people are involved. Accidents and injuries, whether to an employee or third party, are the responsibility of the production company director. Damage to hired equipment as well as unforeseen time losses can come back to haunt a film maker, but may be insured against. Optimising your budget is as much about ensuring that it is used on screen as planned, rather than on fixing problems later.

Finance and legals are another necessary evil, not to be shirked, and lawyers are in fact just another form of insurance. Proper contracting will protect and preserve your position or possession of the film, as appropriate. Most forms of funding will require accountability and audit. This is part of the business package that you must present to increase your prospects of getting funded. It will give your investors security, enhance your professionalism, and ensure appropriate and responsible treatment of taxes, legislative requirements and tax deductibility.

If produced without a distributor in place there should also be an allowance for marketing the film in the budget, or considered in the business plan. At least allow for the production of marketing tools, an electronic press kit and ample stills. There are marketing and travel grants available from the government funding bodies, along with post production grants (if a film is seen to justify a 35mm blow up, for example). A film in the can is not necessarily a film in Cannes.

Be brave, be passionate, plan to succeed.

This text was based on a session Moneypenny ran at SPAA 03 on how to optimise your budget, and sessions at SPAA Fringe 03 on preparing a business plan and financing your film.

The article originally appeared in Inside Film (IF) magazine. Reprinted with permission.

*Updated by the AFC. See Get the Picture Online.