In a follow-up to our earlier story about yesterday's "Soft Money, Uncle Sam, Equity and Crowdfunding" panel at IFP Film Week, we have compiled a list of the top challenges facing filmmakers when it comes to crowdfunding, per the panel's participants. These aren't presented to discourage you, but rather to let you know what you're up against so you can steel yourself before you start.
Here are the Top 8 Challenges of Crowdfunding:
"Timing is essential You may not go into production before the end of the year and then you're going to have to pay tax before you even get to do anything.." – Cameron Keng, founder, AutoTax.me.
"Filmmakers don't want their film to seem like a charity case. They might be reluctant to ask for donations from friends on Facebook." – Robert S. Fingerman, CPA and president, Independent Films Production Consultants
3. Crowdfunding Fatigue
"I'm worried about crowdfunding fatigue. There are 9000 websites that are registered with the word crowdfunding in them." – Colin Brown, editorial director, Slated
4. The Celebrity Issue
"I'm curious to see what happens when the celebrity films like the Zach Braff project and the Spike Lee project enter the marketplace. It will be interesting to see what happens if those films do well or do badly – or, more likely, when they're somewhere in the middle. We're going to have to deal with the psychology of the reaction to that." – Colin Brown, editorial director, Slated
5. Tax implications
"What it comes down to people have to understand if you get a donation, that's income and you're going to pay tax on it." – Cameron Keng, founder, AutoTax.me.
"The challenge is endless as far as conformity with the IRS. Do I set up an LLC first? Maybe I want to see if I have succeed with crowdfunding first? If you have success with crowdfunding, the IRS is going to want to see a 1099 form and they're going to want to know where to send it." -- Fingerman
6. It's complicated
"The more different types of financing you use, the more complicated it gets. Your knowledge as a producer has to really increase. It would be amazing to have an accountant or a lawyer on retainer, but as an indie producer, you can't do that. If you're mixing debt and equity and tax credit, it's confusing." – Mynette Louie, producer
7. More competition is coming
"You're going to be competing with the Disney organization" – Fingerman
8. It's hard to stand out
"The opportunity for there to be investments made through crowdfunding is amazing, but not if the investors don't know how to find you. - Dianne Debicella, senior program director, fiscal sponsorship, Fractured Atlas
Have we missed any? Tell us in the comments below.