The Budget
Estimating the Anacostia
Unplugged budget was no picnic. Determining our film needs (vs. wants…),
calculating the extra fees and taxes, developing a fiscal sponsorship
relationship with our partner non-profit Groundwork Anacostia, and predicting
the reward and shipping costs took endless hours of research and calculation. My
hope is that this entry will help explain to donors where the budget of nearly
$50,000 came from. I would also like to support other innovators attempting to
start their own Kickstarter Campaigns; I know I relied heavily on similar blog
articles for information, and I will also share those here.
Crew- 35%
Creating an extensive online documentary series like Anacostia Unplugged takes a lot of time and effort. I’ve been funding this out of my own pocket for nearly two years now, and it has not been easy nor is it a long-term solution. So to make this work, I do need to get paid so I don’t have to keep starting and stopping, and can continue to give Anacostia Unplugged the attention and time it needs to thrive. Keep in mind that Anacostia Unplugged was never intended to be for profit, so I will not be making money off of the videos because that defeats the purpose of having them free and accessible online, as I believe they should be. That said, because Anacostia Unplugged consists of a small production team, the cost is reasonable. The following partial salaries were accounted for: the producer, director & primary filmmaker and editor (me), composer, and an assistant editor. If you keep reading, you'll see that my salary has also become part of the built in contingency fee. We also had initially budgeted in payments for musicians contributing their music, and young actors to help re-enact historical moments that will be featured in the first episode, but decided to remove those costs.
Equipment- 7%
The first thing we did is create a list of needed equipment, and a list of wanted equipment. For example, I’ve been using Final Cut Pro X on a Macbook ’08. While I love this Macbook, it has prevented me from being efficient and productive. As a result, I have had to rely on other systems throughout DC, and switching between computers has damaged some of my footage and just been an overall headache. So a computer that can handle higher levels of processing went on the needs list. A wireless external Sennheiser mic went on the want list. While this would be helpful, it is not essential, so we had to let that go (along with everything else on our want list). Other items that went on the need list: GoProHero3 (getting B-roll along the river), GoPro mount, extra batteries, external hard drives, a functional tripod (ours has seen better days), lenses for our Canon G20 DSLR cam-recorder, and website service fees. All very reasonable, and we can keep the equipment at a low cost because we have a strong equipment network we can tap into when other needs arise, (thank you Earth Conservation Corps). I’ve also already purchased anything else that was essential, like our one new cam-recorder, a Canon G20 DSLR.
Location and Service Expenses- 5%
The big fee here
was predicting the National Park Service Permits to film on NPS grounds.
Initially, we also included transportation costs, but later removed that cost.
Kickstarter/Fundraising- 0%
This comes to 0%
because we removed this fee from our Kickstarter Budget. What would have been
included are the fees for purchasing business cards, t-shirts (mostly for
volunteers), hiring a website designer, the logo design, tabling events (there
is usually an associated fee), and crafts and food for our upcoming Special
Event.
Post-Production- <1%
The copyright fees
for the documentary series will ensure that it remains free and accessible
online, and that no one can charge someone to watch an episode. I estimated
this cost with the US Library of Congress.
Contingency- 4.5%
Initially we
built in a 10% contingency fee to cover the extra costs that come up that you do
not expect (but will almost always arise). The magic 10% is what was
recommended by a variety of online resources detailing how to build a film
budget. To be clear, you take 10% of your needed budget, and do not include the
extra taxes and fees. To keep the budget under $50,000, we had to reluctantly
reduce our contingency fee to 4.5%. If needed, I will take from my built in
salary the extra costs that come up. I am dedicated to making Anacostia Unplugged
successful, so I accepted that my salary will also act as the contingency.
Kickstarter Rewards- 7%
At first I was
at a complete loss with how to budget in Kickstarter Rewards, and how to decide
what rewards to offer. I spent a lot of time browsing around other Kickstarter
Projects to see what they offered at different pledge levels for inspiration.
And then I stumbled across this blog entry, and found a formula to help
estimate costs:
Joey Daoud
created a formula based off the total project cost and statistics he ran from
other funded projects to estimate the number of backers needed at each reward
level. Once you know the number of backers needed at each reward level, you can
estimate the number of predicted rewards you will be purchasing, and their
shipping costs. I took Joey’s formula with a grain of salt, but it seemed
logical enough and gave me some numbers to work with. The one adjustment I made
is that instead of budgeting in rewards for every backer, I made the prediction
that on average 70% of backers will be getting a reward, opposed to 100%.
Once I predicted
the number of estimated rewards needed at each pledge level, I was able to
estimate total costs and the associated shipping costs. For example, with the
formula we predicted that in total approximately 898 people would be getting a
post card. We then estimated with vistaprint.com how much it would cost to
purchase and ship 898 post cards. For the remainder of the rewards, we decided
to select items that would fit in USPS flat rate envelopes and the smallest
flat rate box, to reduce shipping fees. We used the USPS flat rate prices since
there was no way to predict where we will be shipping all of the rewards, even
if I assume most of them will be staying in DC, I had to somehow account for the
price it would take to ship an award to a Anacostia Unplugged fan in CA. I then
picked up all the different sized boxes and envelopes at the local USPS office,
and pieced everything together to make sure costs were accurate. For example,
originally the reusable bags were going to be water bottles, but once I
realized that the water bottles didn’t fit into the envelope, I decided that
shipping was going to be way too expensive and switched to reusable bags. In
terms of international shipping costs, I read an article that recommended
having international backers add $10 to their total cost to help account for
shipping, so that’s what I did.
TOTAL TAXES AND FEES- 45%
Unfortunately,
as a whole taxes and fees account for 45% of this budget. Below you will find
out why:
1. Fiscal Sponsorship- 8%
Figuring this
out was quite the adventure and took months of research and preparation. Once I
decided to use Kickstarter to fund Anacostia Unplugged, one of my friends asked
whether companies and large donors would get taxed off their donations since
the money would be funneled directly to me opposed to a non-profit. I talked
with Kickstarter, Amazon (who used to manage the accounting with Kickstarter), pro
bono lawyers, and then STRIPE (who took over for Amazon by the time I launched
my Kickstarter), etc., and eventually figured out that a non-profit could
collect the initial funds from Kickstarter as my fiscal sponsor so that all
donors receive their tax benefits. I talked with a few of our partner
non-profits, and Groundwork Anacostia kindly agreed to become our fiscal
sponsor. We have been filming members of their Green Team for over a year, and
they are very involved in the community, so it seemed like a good fit.
Groundwork
Anacostia and I have been working closely for a few months to determine how a
fiscal sponsorship relationship would work in this scenario. The following
agreement was reached: “As
the official fiscal sponsor of Anacostia Unplugged, we receive and administer
all funds that Anacostia Unplugged will use to carry out the documentary
series, and will send all required acknowledgements to donors of tax-deductible
contributions. The Board of Directors of Groundwork Anacostia has the final
authority concerning fund solicitation and use of the funds received for
Anacostia Unplugged.” I will
maintain artistic ownership of Anacostia
Unplugged, and will credited for the series. This kind of relationship can
get tricky in the eyes of the IRS, which is why all of the stipulations above
were agreed upon. The 8% fee will help cover administrative costs for having
them handle the money.
A lot of people
have asked me why I haven’t become a non-profit or a business, and the short
answer to that question is that as of now, Anacostia
Unplugged is a short-term film series not a long-term project, so as of
this very moment, it would not be worth the time and money to start up a
non-profit or a business. Therefore in my opinion, crowd sourcing was the most
appropriate and logical first step to obtaining the necessary funds.
I’d also highly
recommend reading this article to obtain a better grasp of the different ways
fiscal sponsorship agreements can function: http://grants.firesafecouncil.org/Fiscal_Sponsorship_Six_Ways_To_Do_It_Right.pdf
2. Income Taxes- 29%
Unfortunately,
the IRS has not caught up with crowd sourcing initiatives, and all funds raised
are taxed, opposed to being able to specify what is equipment vs. salary. So
when Groundwork Anacostia funnels that money back to me, it will be seen as my total
income and I will be taxed accordingly from DC and the federal. While this
number is extremely daunting, it is accounted for (opposed to getting a big
surprise later) and this is the way the system works for better or worse. I
would also be taxed regardless of the fiscal sponsorship relationship, so in
this case, at least donors get some benefits even if I cannot.
I’d also
recommend reading this article on Kickstarter and taxes: http://nofilmschool.com/2014/04/crowdfunding-taxes-kick-starters-hidden-bite-stop-the-bleeding
3. Kickstarter Fees- 5%
Kickstarter
keeps 5% of the total funds raised.
4. STRIPE Fees-3%
STRIPE is the
firm that manages the money, and holds it throughout the Kickstarter Campaign.
They are the ones who will ultimately redistribute the money back to the donor
if the project is unsuccessful, or move it to Groundwork Anacostia (in this
case) if the end funds are met. STRIPE keeps approximately 3.2% of each
donation made.
I hope this entry helps shed light about the amount of time, thought, and energy that went into creating our budget. I very much want everything to be transparent because if you are going to donate your money, you should know exactly where it is going. So now you know! Please feel free to reach out with any questions at: anacostiaunplugged@gmail.com.
