Help on a film: the Intern

Oh the infamous intern/free labor…or is it? Most don’t even know that if you are a for profit company, then a true intern must be paid or you are in violation of the Labor Laws. Ouch. Trust me I know. This is not 100% true, but in most cases it is.
I know if you are doing a feature and using the latest RED camera, who wouldn’t want to jump in and help. I mean look at all the new graduates coming in to the workforce with no true skills. Plus, it’s FREE labor to you. But, that is actually not the case, and the Labor Department is starting to crack down, so be forewarned. And if you do want to use unpaid interns, you have to check off these six items: http://wdr.doleta.gov/directives/attach/TEGL/TEGL12-09acc.pdf
Just a few to highlight: the intern must be given adequate training to equal that of a school; the intern can not just take over someone else’s job who would be paid to do it; and you can’t take advantage of them, meaning you truly want to help the young intern get some real experience so he can eventually get paid for this type of work.
So, imagine, you can’t just have an intern as your boom op, because he would have to not be replacing someone who would/could get paid for that role. So you have to have a boom op. If you want the intern to get some experience, then the paid boom op must stand aside-still getting paid himself-and help the intern learn the ropes. You can’t just send the intern for coffee or errands, because that would be a PA job, not getting experience as a boom op. They must be “learning the trade.” It does actually make sense, if you stop and think about it.
Having interns can be a great opportunity for you and them. But, I think, sometimes what we’re truly looking for is a “volunteer.” We had several volunteers on our film.

Another really good article:
http://laborlaw.typepad.com/labor_and_employment_law_/2007/11/unpaid-internsh.html.

How to find investors with money the right way for movies.

Of course I have to qualify that I’m not a CPA or an attorney. Laws change all the time, so please do your own due diligence and ensure what I’m saying is accurate and correct, or better yet hire an attorney to do so. This is just a fellow filmmaker trying to help.

I’ve seen a lot of misinformation going out about investors. In fact many people are down right breaking some federal laws. I’m sure its innocent, but breaking them never the less.

Investments are generally dealt at the individual level, but once you cross over to soliciting for investors, the SEC comes in. I’m assuming this is just an LLC, and thus it is considered a “private” investment.

Here at some highlighted points to note (if not filed with the SEC):
1. An investor must be a “substantial and a pre-existing relationship”.
To be "pre-existing," a relationship should be “known” before the terms are developed and the investment begins. You have to know them before you start asking for the money.
The internet is new and still being defined as it relates to investors, but what I am sure of is you cannot blast a simple email out to others asking for money – as you are not allowed to advertise for investors and this has been deemed advertising. Just like you are not allowed to take an ad out in your local paper.

Is this how you think you are going to find your money anyways – through an email blast? Finding investors is hard work, you’re not going to find a legit investor with a sympathy email blast.

2. You are only allowed 35 non-accredited investors.
If they do not meet the qualifiers below – they are non-accredited. So, if your budget is $200k – and all you have access to are family and friends (most are probably non-accredited); a general rule of thumb: divide that by 35 and that’s the minimum amount you can accept for an investment.

An accredited investor is defined by Rule 501 of Regulation D of the Securities Act of 1933, and must abide by the registration requirements of the U.S. Securities and Exchange Commission (SEC). These investors must meet certain criteria.

The federal securities laws define the term accredited investor in Rule 501 of Regulation D as: (refer to http://www.sec.gov/answers/accred.htm for more information)
1. a bank, insurance company, registered investment company, business development company, or small business investment company;
2. an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;
3. a charitable organization, corporation, or partnership with assets exceeding $5 million;
4. a director, executive officer, or general partner of the company selling the securities;
5. a business in which all the equity owners are accredited investors;
6. a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;
7. a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
8. a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

Money is out there. Is it easy – no? But doing it the right, and legal way, is always the best way.

Some other great articles are:
http://startuplawyer.com/preferred-stock/life-is-too-short-to-deal-with-non-accredited-investors

http://allaboutindiefilmmaking.blogspot.com/2009/05/how-not-to-use-internet-to-find.html

How to use the internet with investors:
http://firemark.com/2009/05/13/how-not-to-use-the-internet-to-find-investors-for-your-film-or-theatre-project

Film Funding: How to use Section 181

I know there's been much talk on Section 181, but I wanted to chime in and give my two cents, as I fear not all of the information may be accurate.

Being a former cop, I know there is the "spirit" of the law vs. the "letter" of the law. I know what we all want Section 181 to be, but alas I'm afraid it has not been interpreted that way by the most important entity - the IRS. I know the legislation was written in such a way as to help investors feel better about investing with film in the US, to offer them an immediate tax break.

However, regardless of how we might interpret this, the important interpretation is how the IRS has defined it. Not an attorney or a CPA, just ask Mr. Wesley Snipes.

This is taken directly from the IRS:
Here is the link that explains the IRS regs that are in place for the statute section 181.
http://www.irs.gov/irb/2007-12_IRB/ar10.html

It is clear that there are a few major items that qualify for the deduction,
  -member of the production company
  -ACTIVE producer in the production
  -invested capital in the production

This allows for the amount of capital investment to be deducted from taxes in the year the expenses occured vs having to wait for income from the production before being able to take the deductions. It all evens out in the end.

It still has a cap of $15 million in total deductions, and has been retroactively extended till the end of 2011.

I do know that they are trying to amend the legislation to reflect the spirit of the law, and I know the IRS is trying to be very liberal; but for now - you better be very careful in how you "advise" others on Section 181.

Out of all of our current investors, myself and the two other owners of our company were the only ones able to take advantage of 181.

This is not official advice, just some thoughts - do with it as you may.

The Fellows Hip Hits the Press!

Hey – wanted to update you about our film, “The Fellows Hip”. We recently made the front cover of the Alexandria Gazette http://files.connectionnewspapers.com/PDF/current/Alexandria.pdf,
and are on page 10 on the Reston Connection.

Casting is underway and going well. We are seeing a ton of people respond and though it’s a ton of work – it definitely doesn’t feel like it. I mean – we are making a movie people! This is exciting stuff.

We are excited that you are on this journey with us, and know many of you have taken an opportunity to get involved in one way or another. We are setting ourselves up for a great turn-out!

Looking forward to working with so many of you!

The OAP Team

Updating the Buzz

The Fellows Hip: Rise of the Gamers Movie Supporters-We're glad you're on the journey with us!
It's with an excited hand that I type this update. We have a lot to be thankful for and the road ahead of us is a promising one. Buzz is in the air as we have received some local interest with a media source. Though it's in the early stages of what may be done-they are eager and hopeful for our success and desire to assist us with some PR.
We still are in some positive and encouraging talks with a very large online gaming company. Indications are that we are moving forward to form a partnership that would be fantastic for our marketing efforts. We've had some fun and innovative conversations with them about how this would all tie in, and I can ensure you that getting them onboard will be just as valuable as having "Frodo" attached to our film, though we are still in negotiations with some A-list actors to do a cameo.
We are currently completing our crew and are very pleased with their expertise, talent and passion. Everyday more people are joining us to help ensure this film meets its goals and is a success!
The last update would be that we have some overseas interest in the film, which does include a probable financial investment. We have also reached out to many of our contacts in the industry about where they may be able to assist us, as our motto is "people helping people."
We look forward to future updates, with even more positive news, as we press on!
Ron, Scott, and Shane
http://www.openingactproductions.com/
http://www.thefellowshipmovie.com/

When to Make a Good Film

Like many of you independent film nuts out there, we’re working on raising money to make our film. Some people say this isn’t the time—the economy sucks, investors are jittery and distributors of independent film have contracted. (Though a new independent distributor, Anchor Bay, bucked the trend recently and came on the scene for theatrical distribution. I wish them well.) But maybe that’s the point.

Anytime is a good time for a good film, but maybe now when people need a lift is even better. So far this year, the box office seems to be saying so. As of the end of March, movie revenues were $2.38 billion, up 12 percent from 2008, according to Media By Numbers. Even with higher ticket prices, movie attendance also was up 10.4 percent. Not bad. I’m sure auto dealers and other struggling businesses would welcome that trend right now. Some of us would like to see that for our stock portfolios, that’s for sure.

When times are bad, people won’t—and can’t—buy a new car, but they will welcome a new movie. During the Great Depression (that name was appropriate in so many ways), people would scrape up the 30 cents or so to see a movie. Sitting in the theater may not have helped them pay the mortgage, but it did do them some good. One book describes it like this

“Outside those sacred doors crouched the pale gray wolf of Reality and the Depression. On the skyline the dark, sullen hulk of the steel mills lay silent and smokeless, like some ancient volcano that had burnt itself out, while the natives roamed the empty streets and told wondrous tales of the time when the skies were lit by the fires of the steel crucibles. And there was something that occupied them all, called Work. Even the word “Work” itself had an almost religious, mythological tone.”

That could describe a lot of places today—Michigan or Pittsburgh or Northern Indiana, where this story is set. The quote is from In God We Trust: All Others Pay Cash by Jean Shepherd. It’s the book from which that holiday classic and TBS marathoner, A Christmas Story, is adapted.

If you like the movie, you really should read the book. You will see that the screenplay is a skillful adaptation. There’s probably enough left though that they didn’t use for another movie. Was anyone else sad when Darren McGavin died a few years ago? The casting was pitch perfect.

One thing left out was the great chapter on the Orpheum Theater and its showman-owner Leopold Doppler. You get the impression that, at least in Hohman, Indiana, the movie theater was the heart and soul of the town, a place of wonder and relief, during the Depression. Shepherd writes,

“Mr. Doppler operated the Orpheum Theater, a tiny bastion of dreams and fantasies, a fragile light of human aspiration in the howling darkness of the great American Midwest where I festered and grew as a youth. Even now the word “Orpheum” sends tiny shivers of anticipation and excitement up the ventilation pipes of my soul. And Mr. Doppler, like some mythical God, reigned over his magnetic palace of dreams, fighting the good fight alone and uncheered.”

Of a typical moviegoer he writes,

“He scrabbled and scraped week after week to scratch up the price of a ticket…”

I know times are different (someone pointed that out recently when discussing this subject) and movies have a lot more competition with the Internet, videogames and other stuff, but movies seem to be holding their own. And while they have more options, people haven’t changed that much deep down since the Depression. Movies still have their own type of catharsis that people need. Some call it escape, but I don’t think it is. I’ve walked out of the doors of a theater encouraged to handle a few things, or at least in a better state of mind to face them.

So it may be a bit more difficult, but I think there’s no better time to make a film. The risks are great (Haven’t they always been for independent film?), but so are the rewards for you—and your audience. Now, if we can just get those investors onboard.

Enjoy! Scott

Movie making - is asking for help.

We have all heard that it takes a village to raise a child. Well, this is true with many endeavors. For us to live out our God given dreams – it’s going to take more than just relying on ourselves. We were created with a purpose and community in mind. We have a mission, but we can never do this alone. But, why is it SO hard to ask for help?

We don’t want to be a burden, or cause any hardship or work for others. Yet if someone in our close inner circle asked us for help, what wouldn’t we do for them? One of the hurdles in fulfilling our dream is getting over asking for help from others.

I know this all too well as an independent filmmaker. When people hear you’re making a film, they assume you have the magic money tree. But this is not the case. Most filmmakers have no clue where the money is going to come from. It isn’t going to take just a few people writing a check. It’s going to take a large amount writing checks for all different kinds of amounts. This is a big hurdle because it is not only asking for help – but asking for money.

This is slightly different; it is not a loan and the potential for a return of their trust in the filmmaker – can return…well “Blair Witch” cost roughly $35,000 to make and made well over $248,000,000, not a bad return for three investors.

People however invest in people – not projects. Setting a business model and strong Return on Investment plan is part of the process, but the bottom line is going to be asking several who believe in the filmmaker and the work they are doing to invest in the dream that is to be built.

A film is not a solo sport. We all know that the end credits take several minutes to fly by filled with the names of the people who helped in the film. So a filmmaker must not only ask for funds but also for other resources to complete the film. There is an army of people that help in the film making process. Just like in most dreams – it’s going to take that army to fulfill it.

Imagine if no one ever asked…what would get done? Well, I’m not about to find out! :)