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Daniela Bailes is a working film and television writer whose work travels across genres. A proud alumnus of the Yale Writer’s Conference in New Haven, she was mentored by literary luminaries before being selected for the National Hispanic Media Coalition TV Writer’s Program, a feature writer on the Latinx Black List, and as a participant in the Sundance Episodic Lab. Her most recent work was staffing on the upcoming Paramount science-fiction series, The Shift, also selling a feature script to A+E Networks.
At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.
In the competitive world of independent filmmaking, securing adequate funding can often feel like a daunting obstacle. However, in this Sundance Collab conversation featuring award-winning filmmaker Katherine “Kat” Street and Wrapbook's VP of Sales and Production Incentives Ryan Broussard, there's a strategic approach that can significantly ease this financial burden: utilizing production incentives.
Incentives can be a game-changer for filmmakers looking to fund their projects. By understanding the nuances of these programs and applying effective strategies, filmmakers can increase their chances of securing the necessary funding to bring their visions to life.
To learn more about how to leverage production incentives for your film project, watch the full 60-minute conversation here.
Please note that you'll need to log in or create a Sundance Collab account to access the video. No account? No problem! We’ll be providing a detailed summary in this article.
With over 16 years of experience in the film industry, Ryan Broussard is a seasoned expert with a proven ability to help productions maximize their financial returns.
His expertise ranges from developing strategic incentive plans to streamlining the audit process, and his insights have contributed to shaping incentive programs in multiple states.
Production incentives emerged in the United States around 20 years ago as a strategic tool to attract film productions away from California and stimulate economic growth in other states.
These incentives, which typically take the form of tax credits, rebates, or grants, offer financial benefits to filmmakers who choose to shoot their projects in participating states.
The concept is simple: by offering these incentives, states aim to lure film productions away from traditional hubs like California and encourage filmmakers to explore new locations.
This influx of production activity can have a substantial economic impact on a region. As crews, cast members, and production staff spend money on local services such as hotels, restaurants, and transportation, it creates a ripple effect that benefits businesses throughout the community.
While production incentives offer cost savings for filmmakers, they also serve as a valuable tool for states to promote their locations as desirable filming destinations.
The success of these incentives in states like Louisiana and Georgia has encouraged other states to adopt similar programs, hoping to attract their own share of film productions and boost local economies.
Production incentives in the United States primarily fall into two main categories. The first is grants and rebates; the second is tax credits.
Grants and rebates are essentially cash payments that states allocate to eligible film productions. These incentives are typically awarded based on meeting specific criteria, such as minimum spending within the state. Once approved, filmmakers receive a direct payment from the state.
Tax credits function differently. They offer financial benefits in the form of tax reductions or credits that filmmakers can apply against their tax liabilities. Several types of tax credits are available, including investment tax credits, production tax credits, and payroll tax credits. Each type has its own specific requirements and eligibility criteria.
In essence, grants and rebates provide upfront cash payments, while tax credits offer deferred financial benefits through reductions in tax liabilities. The most suitable type of incentive for a film project will depend on the specific circumstances and financial needs of the production.
Production incentives vary significantly across states with different programs offering unique benefits and eligibility criteria. One key difference lies in the refundability of tax credits.
Fully refundable tax credits, such as those offered in New Mexico, allow filmmakers to receive a direct cash payment from the state, regardless of whether they have tax liabilities. This is particularly advantageous for filmmakers who may not have substantial tax obligations in the state where they shoot.
In contrast, transferable tax credits, such as those offered in Georgia, cannot be directly converted to cash. Instead, filmmakers must sell these credits to a third party, such as a corporation with tax liabilities in the state. This can introduce additional complexities and potential discounts when selling the credits on the open market.
Another important consideration is the type of production being filmed. States may have different eligibility criteria for various formats, such as features, documentaries, or episodic television.
For example, while Louisiana and Georgia offer incentives for a wide range of productions, some states, such as California and New York, may have restrictions on unscripted content.
It's essential to carefully research the specific requirements of each state's incentive program to determine if your project qualifies. For instance, some states, such as Georgia and Louisiana, have minimum spending requirements, while others may have additional criteria related to job creation or local hiring.
By understanding the unique characteristics of different state programs, filmmakers can make informed decisions about where to shoot their projects and maximize the potential benefits of production incentives.
The accounting and timing requirements for production incentives can vary significantly depending on the specific program.
Grants and rebates are generally processed more quickly than tax credits, as they typically do not involve the complexities of tax filings or selling credits on the open market. However, it's important to note that the availability of funds and the efficiency of state agencies can also impact processing times.
Additionally, the audit process for production incentives can vary in length and complexity. States such as Connecticut may require a full financial audit, which can be time-consuming. Other states, such as Georgia, may have specific requirements related to documentation, verification of expenses, or AUPs (Agreed Upon Procedures for the audit).
To ensure a smooth and efficient process, it's crucial to work with experienced accountants who specialize in production incentives. A well-organized accounting system can help streamline the audit process and reduce the likelihood of delays.
While the timeline for receiving incentive payments can range from a few months to several years, maintaining clean and accurate records can significantly expedite the process.
When choosing a state for your film production, it's important to consider factors beyond just the financial incentives.
Factors such as audit requirements, eligibility criteria, funding requirements, application processes, state preferences, crew availability, budget considerations, and local connections should all be carefully evaluated.
Audit requirements can vary significantly across states.
For example, Connecticut may require a full financial audit, while Georgia may have less extensive review procedures. Understanding these requirements will help you plan for the necessary accounting and documentation.
Funding requirements can also vary. Some states, such as California, may require proof of funding before approving incentives, while others may have more flexible requirements. Additionally, the percentage of funding required can differ. For example, some states may require 80% to 100% of your funding to be in place, while others may be more lenient.
The application process for production incentives can also differ across states. Some states, such as California and Ohio, may have specific application windows, while others may have more flexible deadlines. Additionally, the documentation required can vary. Be sure to research the specific requirements for the states you're considering.
State preferences can also play a role in the incentive process. Some states, such as Missouri, may have a preference for projects that showcase the local area or culture. Others like Texas may have restrictions on content that could be considered offensive or inappropriate.
Crew availability can also be a factor. While major cities such as Los Angeles and New York have large pools of skilled crew members, smaller states may have limited resources. Additionally, popular states may be busier, making it more challenging to secure crew members and potentially increasing costs.
Budget considerations are also important. While incentives can offer significant cost savings, it's essential to consider other factors that may impact your overall budget. The cost of living, housing, and other expenses in the state should be evaluated. Additionally, factor in potential transportation costs for bringing in crew members or equipment.
Having local connections can be beneficial for navigating the incentive process and accessing local resources. Consider reaching out to local film offices or industry associations for assistance.
By carefully considering these factors and conducting thorough research, you can make an informed decision about the best state for your film production. Remember, while financial incentives are important, it's also essential to evaluate the overall suitability of a location for your project's needs.
Production incentives offer a valuable opportunity for filmmakers to secure funding and bring their projects to life. By understanding the different types of incentives, the eligibility criteria, and the application process, you can make informed decisions about the best options for your film.
To learn more about each state’s film incentive program, head over to our Production Incentive Center, which offers options to explore individual state incentives and compare states.
