How to Finance a Film: 9 Ways to Get Funding for Your Film

Most films are financed through a combination of investors, tax credits, grants, and other sources. This funding must be secured (usually by film producers and sales agents) at the beginning of a motion picture’s development, in order to pay for all the costs that accrue during the making of a film. There are two main ways that this funding can be secured:

• Through a studio. The film studio handles most of the financing when a feature-length film is being made under the umbrella of a major film studio (often called a “Hollywood film”). The company producing the film is usually tasked with doing the legwork to gather enough investors to fund the film.
• Independently. A film project made without the help of a major studio is called an “independent film” or “indie film.” When a film is being produced independently of a studio, it’s up to the film’s producers to secure financing for their project. Independent filmmakers use their personal networks, tax credits, and grants to patch together funding to make their film.

There are a number of methods that you can take advantage of to secure film funding:

1. 1. Grants: There are a wide array of filmmaking grants and fellowships available to filmmakers, from government grants to grants offered by nonprofit organizations, film festivals, and film institutes. While government film funds are usually lottery-based or only require basic criteria, most other film grants are merit-based, meaning that aspiring grantees need to go through an application process to receive the grant money. Many grants require specific criteria; for example, there are grants for first-time filmmakers, women, new-media storytellers, and documentary filmmakers. There are also grants for every stage of the film process, including development grants, production grants, post-production grants, and distribution grants.
2. 2. Tax incentives: In the US and Canada, there are a number of tax incentives, deductions, or rebates available for shooting portions of a film, or housing a film’s crew in certain areas, often to promote tourism in an area or take advantage of an area during its off-season. These tax incentives apply to a variety of films including documentaries and big-budget studio films. In film financing, tax incentives are referred to as “soft money” because the filmmakers do not have to pay the incentives back. Tax incentives are not available until after a film production is finished, and the film’s accounting team files taxes for the production.
3. 3. Pre-sales: Pre-sales are a way to receive payments before a film is completed, by selling the distribution rights to different territories (both North American and foreign distributors) before the film is completed. In return, these financiers can make requests for specific actors to be added to the cast, genres, or topics. However, if the filmmakers can’t follow through with these requests, pre-sales funding may collapse.
4. 4. Negative pickup deals: Negative pickup deals are a form of debt financing, when a producer sells the film project to a studio for a set price—but the money is only available after the entire film has been completed. In the meantime, the filmmakers will need to secure funding as normal, and will often have an easier time securing funding because they can then ask banks to lend against the value of the deal. These can be risky, though—if the film’s budget ends up going over the figure offered by the studio, the film team will need to find a way to pay for the difference.
5. 5. Gap financing: In gap financing, filmmakers take out a loan from a gap company against the film’s unsold rights—including box-office rights, streaming permissions, and DVD sales. Gap financing presents high-risks for both parties, because it’s impossible to predict how a film will perform in either North American or foreign markets, and the estimated value of the unsold rights may be inaccurate and yield a poor return on investment.
6. 6. Private investors: Private investors are another avenue for getting a film funded—whether it’s someone who wants to diversify their investment portfolio or a wealthy person who just loves film. Private investors make up a very small portion of film finance because investing in film is considered a high-risk venture.
7. 7. Fiscal sponsorship: Fiscal sponsorship is a contract in which a film team can partner with a nonprofit organization in order to receive tax-exempt status for their project. With a tax-exempt status, a film project may be eligible for more grants and tax-deductible donations.
8. 8. Crowdfunding: To crowdfund a film, the production team will publish their pitch, trailer, and/or cast list and ask members of the general public to submit individual donations to help the team reach its goal. A number of small-budget films have been able to raise a portion or all of their financing through crowdfunding campaigns.
9. 9. Product placement: Product placement is a form of film financing where filmmakers agree to feature certain products or brands in their film, and in exchange receive either free products (for example, high-end cars for chase scenes) or direct film financing.

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