Where Do Documentary Dollars Come From?
When it comes to financing documentaries, many think the options are either running up a tab on credit cards, shaking down family members for cash or calling in one favour after the next. And all the while, colleagues and acquaintances are probably starting to seriously think about blocking your calls and texts.
But it doesn’t necessarily have to be that way. Though all the above possibilities form part of the picture, particularly for documentarians just starting out, there are other financial avenues available for exploration. Each one comes with its own basket of risks and potential rewards, of course, and this was the focus of a fireside chat at the recent Hot Docs Industry Conference in Toronto.
The documentary gold rush
After years of being limited to the film festival circuit and one or two broadcast windows, the advent of subscription-based video on demand services has brought a whole new audience and new sources of dollars to the world of documentaries. Over the past two years, seven documentaries were sold for over a million dollars and even well beyond that amount – numbers that were previously unheard of in the sector. And yet, when feature documentaries such as Won’t You Be My Neighbor and RBG are grossing $22 million and $14 million respectively, it’s not hard to understand the rush of interest in the genre.
The big ticket story at Sundance this year was the $10 million sale of worldwide rights to Knock Down the House, the story of the unprecedented influx of women in the U.S. Congress, most notably the firebrand Alexandria Ocasio-Cortez.
Other doc deals in the 7-figure range that were struck this year include NatGeo’s $3 million acquisition of Sea of Shadows, Netflix’s close to $3 million for American Factory and Hulu’s $2 million acquisition of The Untitled Amazing Johnathan Documentary.
Beyond government funding
In addition to Canada's federal and provincial funding sources and tax incentives for documentaries, there’s a whole other world of financing to consider. However, as with anything riddled with risk and uncertainty, there are different trade-offs to consider, as well as new knowledge required for navigating new systems.
The main types of documentary financing, outside of self-funding and governmental funding bodies, include:
- Private equity
- Venture capital (VC)
- Co-producers' equity
- Broadcast equity
At the 2019 Hot Docs conference, the challenges and benefits of these options were considered from both a Canadian and US perspective. The former was provided by filmmaking veteran Bob Moore, of Montreal’s EyeSteelFilm, and the latter by Sundance award-winning documentary producer/director James J. Yi.
Business deals & legal obligations
Yi was quick to point out the main differences between Canadian and US funding models. More specifically, when dealing with private investors, there are binding contractual requirements. “It’s a business deal with legal obligations,” he reminded the session’s attendees. EyeSteelFilm’s Moore made it even plainer: “Your house can be on the line… so all of a sudden, your legal line is big.”
Assuming most filmmakers, like them, are lucky enough to have houses, Yi and Moore offered a high-level breakdown of each category of financing, along with the risks, rewards and potholes that may initially not be visible when going down the documentary road.
Doc funding options at a glance: Beyond grants & government sources
In addition to providing a crash course on the many financing options available to documentary filmmakers, Yi and Moore also had some tips for producers, noting that some options apply more to US financing models than Canadian ones.
Among their top tips:
- Start a separate company for each film.
- Be sure to contract based on net profit share, not the company, and not the intellectual property/IP.
- Your investors are just that: investors.
---> As a courtesy, filmmakers may allow showing a cut of their film to investors. However, it’s important to specify, not just verbally but in the actual contract, that the film’s producers and director retain final cut rights.
- Manage expectations. Clearly specify what investors can expect in return for their $50,000 or $100,000 investment. A partnership? A tax benefit? An on-screen credit?
- Note that public financing for documentaries in Canada dictates how contracts must be structured, as opposed to the US, where it’s possible to designate Pool A and Pool B investors, with different terms, incentives and payback schedules.
With all the new outlets available for the distribution of non-fiction films, many believe we are witnessing the decade of the documentary. Also, while a $22 million gross for the Mister Rogers feature is an outlier, there’s now potential for such films to reach audiences outside of limited theatrical runs or a brief broadcast window. And along with the broader landscape for distribution come new sources of enthusiasm and funding. James J. Yi is optimistic about the prospects for filmmakers but reminded the audience at the Hot Docs conference that documentary funding is a particularly difficult process. “If possible, he said, look for an investor with a more philanthropic mindset.”
For more information on industry standards for documentary financing and crediting, see this recently released report from the DPA (Documentary Producers Alliance).