Many fresh new independent filmmakers are constantly seeking ways to provide financial backing for their creative projects. Some find financing through studios, but many have to go the route of independent funding and donations. Unless you’ve already got a considerable amount of cash in your bank account or are the next Steven Soderbergh, fiscal sponsorship might be the route to obtaining funding. Fiscal sponsorship can be a valuable tool for a filmmaker.
However, it can also be mistaken and widely misapplied in areas of the law that can create risks for filmmakers and their fiscal sponsors. That’s why it’s ideal for any filmmaker to understand the ins and outs of fiscal sponsorship and how it can benefit your filmmaking needs.
What is a Fiscal Sponsorship?
Fiscal sponsorship refers to several contractual relations that agree to a person, group, or business. Typically, it’s to advance a charitable cause. Fiscal sponsorship is something that many documentary filmmakers pursue. For example, many can raise grant funds that are only given to nonprofits. In addition, these filmmakers can accept contributions from donors who want a tax deduction.
Consequently, the film gets nonprofit umbrella status via the fiscal sponsor. Thus the budgetary sponsor receives an administrative fee per donation, which is the average fiscal sponsor fee of 10%. Many of these fiscal sponsors come from a formal 501(c)(3) public charity arrangement. These public charities agree to become the project’s partners or sometimes guardians on their project. So what is vital is finding the right fiscal sponsorship for your film project.
Find the Right Fiscal Sponsorship
Many nonprofit organizations are ready to help current, and future filmmakers make a statement with their companies. The next step is deciding which one is the best fit for your project. First is by a location relevant to the filmmaker’s project. For example, many fiscal sponsorships across the country will give the filmmaker an idea of their history and ties to the community. Also, some organizations may have geographic or membership requirements. Second is the organization’s mission statement and if it aligns with the filmmaker.
Every association has a mission statement and ideals they are attempting to further by working with filmmakers. An example is the Women Make Movies group. Their beliefs and requirement for their sponsorship are for projects that are noncommercial films and video or multimedia projects. However, the stipulations are that the filmmaker must be a U.S. citizen and the project director must be a woman. The third part in helping find the proper organization for the sponsorship is their reputation.
Reputation is one of the most common means when someone makes a business venture decision. A filmmaker would want to know as much about them as the organization wants to know about their project. Filmmakers should choose their fiscal sponsor by their reputation within the film world. Groups like the Independent Filmmaker Project are perfect for those in the independent film scene. They are a great place to build relationships in the independent world.
Next are the benefits that come with working with a fiscal sponsor.
Financial: The Benefits
Once a filmmaker has a fiscal sponsor, they have access to grants from state governments, the federal government, and foundations. This also includes nonprofit organizations, corporations, and even individuals who require it. Grants, for example, are often given to projects that fall within a particular niche or field. They provide an excellent source of extra cash to help get the project off the ground or provide last-ditch money in post-production. However, they aren’t always capable of covering the entire cost of a film.
Some may even provide perks like fundraising aid, financial advice, grant proposal feedback, and video production equipment access. In addition, using grants is a win for the filmmaker and the donating. People who donate to the project through the fiscal sponsor can get a tax deduction for that gift. And who doesn’t like a tax deduction during tax season?
Creativity: The Benefits Part 2
Many artists worry that those holding the wallet will taint their creative vision. However, that’s not the case when it comes to fiscal sponsors. These people want to see you and the film succeed and often go above and beyond to provide creative assistance. Sponsors provide an outlet and means for the filmmaker’s creative idea because they care about film. Furthermore, they wield no creative control as long as it’s decided in the contract before signing on the dotted line.
The great point is that filmmakers will have instant credibility for their project by partnering with an established and recognized organization. In addition, this notion offers peace of mind to potential donors that their money is being appropriately treated.
Ownership in a Fiscal Sponsorship World
It is essential to ensure that the filmmaker retains full ownership and creative and financial control of their film. Therefore, the agreement is put together before signing a contract and codifying the nature of the relationship. The relationship will eventually end, and it will save the filmmaker and the sponsor time and money to agree on terms of termination at the beginning. These provisions are unchangeable per the nature of fiscal sponsorship for the film. Yet, essential matters must be handled on the filmmaker’s end to make the cooperation amicable.
It’s important to remember since this is a charitable company, the group is obligated to report to the IRS how that money is spent. Therefore, the filmmaker must submit how they used the grant money in the form of ledgers and receipts. The receipts must show how the money was utilized exclusively to create the film. Doing so will keep the sponsor in compliance with government regulation and keeps the filmmaker in good graces with their sponsor.
Filmmakers entering a fiscal sponsorship agreement should have a basic grasp of what the law requires in such an arrangement. In addition, it’s vital to remember whether the fiscal sponsor has adequate understanding to sponsor the film project properly. This includes whether essential provisions are necessary for the sponsor and filmmaker and how the relationship will close. Finally, every filmmaker should have the knowledge needed to make an informed decision in the fiscal sponsorship world. To this end, the bottom line is that a fiscal sponsor will help people take you, the filmmaker, seriously.