Budgeting for Emerging Filmmakers

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 INTRODUCTION

The financial needs of each documentary project are completely different and dependent on
the subject, style, scope and myriad of other parameters, limitations and lucky breaks of a
particular production. As such, this is not a step-by-step guide for how to budget for a particular
production, but rather, an overview that helps you enact best practices for your next project.
Preparedness and adaptability are the most vital tools when maintaining a budget over the
lifecycle of a film.

Starting Points.
First establish broad parameters when creating a budget:

• Schedule delivery date: How long will you be in development, production and
post-production?

• Location: What travel and accommodation needs are there?

• Formats: Will the project require archive or re-enactment? How much and what kind?

The more you reduce your budgets or defer your fees, the less of a safety net you have and the
more likely you are to take risks. It’s only when you have money in your budget that you are able
to move things around. However, if you overestimate your budget, you risk not being able to
close financing.

• Don’t do guesswork on costs—make calls, get quotes, get rates, try to negotiate flat fees
where applicable.

• It is best practice to demonstrate market-level prices for labour. Consult an experienced

production manager to go over your budget; even if you have to pay them, it’s worth it.

Base your finance plan, and hence your budget, on how much you think can actually be raised
and the market value of the film. Be honest with yourself; there’s no point in creating a budget
that you’ll never be able to raise the money for.

• BEST PRACTICE: Ascertain the market value of your film by speaking with distributors,
sales agents and broadcasters and assessing their needs. Review trades for case studies.

• BEST PRACTICE: Talk to other filmmakers. They are usually generous and can discuss
best practices.

The Core Team For Your Production.

• A production manager/production coordinator, either or both, are essential.

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 • Team work with another producer or an executive producer is the best support and a
good sounding board.

• If your project is commissioned or fully funded: both a line producer and creative
producer - to compliment each other’s skills..

The Core Financial Team For Your Budget.

• A line producer or production manager who facilitates production and keeps the budget
on track.

• An accountant deals with tax issues and reports funds correctly.

• A bookkeeper makes sure payments and bank statements match, and inputs actual
costs to date.

Finding a Balance.
As the producer, you constantly cross-reference your expenses with your budget, and constantly
move money around based on what ends up costing a little more or a little less than estimated.
Continually compare the original budget against weekly or bi-weekly cost reports.

• Cost reports detail the costs to date, weekly costs and estimates to complete the film.

• Cost reports are typically done every one or two weeks, based on when your bookkeeping
is done.

• A cash flow report outlines projected cash inflow and outflow by month, and can help a
production plan out how they will flow cash in/out of the production, e.g., whether to take
out a loan to pay bills until their next payment comes in. This is because most financiers
pay in instalments, based on schedules.

• In the Estimate to Complete section, you can adjust any additional costs it will take to
finish the film by line item.

• A cost report will show you how much you have left to spend on each line item, so is
crucial to help you stay on track with your budget.

Getting Paid.
Do not defer director and producer fees if this is can be avoided. If the director and producer are
deferring their fees, try to have all financiers agree that the deferrals come out of any recoupable
funds first. This is not traditional for fiction, but in documentary this can be negotiated.

• BEST PRACTICE: Even if you cannot afford much, try to give your crew per diems. Think
forward on crew expenses and try to alleviate some stress by avoiding having your crew
pay for things out of pocket.

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Treading Carefully.
• Legal and interim financing are probably the most important items to predict accurately;
they are expensive and can balloon quickly.

• Be mindful that it is hardest to keep track of expenses when you are in production,
especially on the road. Create a system to do it effectively.

• When shooting abroad with local crew, consult pay regulations of that country regarding
workers’ compensation, healthcare, union costs, pension, social security, etc. It will likely
be different (and possibly higher) than in your own country.

• Expenses such as travel, re-enactment or length of edit might be a red flag for some
financiers. Be prepared to justify costs and shooting times. Identify legal costs if the
subject matter of your film is controversial in some way.

• Typically budget between eight and 10 per cent for contingency, especially on higher
budget films.

Working with Your Partners.

In a co-production, like all relationship, honesty is best policy.

• Accurately budget for your shared costs by being very honest with each other about what
those costs will look like on each side. If the budget is artificially increased by repeated
items, it will be harder to get the project financed.

• Sit down and go through each line to work out which partner will cover what, and then
work out each of your contingencies based on what percentage of the entire budget each
party contributes.

• Write into your contract that if either of you goes over budget, it’s that party’s
responsibility to cover those costs from their own contingency.

If you are working with government funding bodies who do international co-productions all the
time (and more often than you do), sit down with them and go through your budget. They will
help you navigate relationships with your potential international partners.

Broadcaster Funding.
Regular reporting to your broadcaster is par for the course. You may need to prepare a cost
report every couple of weeks, or at milestones like start of principal photography, end of principal
photography, rough cut, fine cut and delivery.

Find out what your broadcaster doesn’t allow in a budget early on to avoid having to reduce
or move money around in your budget. For instance, some don’t allow marketing or
re-versioning costs.

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Cash Flow.
Be conservative in estimating your tax credits (if applicable) for the finance plan, as you don’t
want to overestimate what finance they can bring in. You will need someone (a lending body
perhaps) to cash flow the tax-credit amount, and there will be an additional cost for that.

• Tax credits are applied to your financing, and are usually received six months to a year
after project completion.

• Plan to receive at least 85 per cent of your estimated tax credit amount. You cannot
consider all budget lines when calculating your tax credits, so know which are excluded in
your country.

• If you are going to bridge finance via a bank loan, find a bank with a reputable film and
television department.

Review Engagement is a final cost report accompanied by an independent public accountant’s

review engagement report. It is meant to ascertain whether or not your financial statements are
believable or plausible, to receive your tax credits. While an audit is meant to give assurance
that your finances are free of misstatements, if you have a budget under $500,000 you may not
have to do an official audit for your tax credits.

Post-Production.
Make sure to clear the rights for your music and archives (festival, theatrical, broadcast, etc.)
and try to clear it in perpetuity. e.g., “All rights, in perpetuity, throughout the universe, in all
languages, and in all media now known or hereafter devised in physical and virtual territories.”

In perpetuity is not always possible, but you have a better chance of getting it at the start rather
than later on. Have conversations and build relationships with your archive rights-holders as
soon as possible. Get them interested in your film. If you can’t pay for everything all at once, have
a deal in place about what the additional fee will be for theatrical/broadcast so that you can
budget for it and not have to re-edit the film later because your material licences have become
unattainable. Do not get married to a particular clip or song unless you can afford it.

It’s easy to pull money from post-production into your shooting schedule, but try to avoid it.
Budgeting for the length of the edit is widely underestimated and you will invariably want
more weeks.

Do not take money from your marketing, outreach, engagement and impact allocation—they
should be part of your marketing strategy from the creation of the budget.

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To consider for Your Granting Bodies.
It is extremely important to deliver your necessary deliverables on time.

• BEST PRACTICE: Grantors, like all funders, expect due diligence.

Incorporate the required logos in the final credits of your film. This is usually a stipulation
of being awarded funding. Non-compliance raises red flags for future applications to that and
other funds.

And Remember.
A sense of confidence in your budget comes with time—something will be under budgeted, but
something else will be over budgeted, and if you do your homework, you will be pretty much on
track. Knowing when to overreact or not comes with time and experience!

Resources.
Canada
Telefilm Production Budget Template:
https://telefilm.ca/en/financing/theatrical-documentary-production

US
ITVS Budgeting Webinar:
https://www.youtube.com/watch?v=vOV9Guh-35o

Sundance Sample Budget:

https://www.sundance.org/pdf/artist-programs/documentary/SampleBudgetFormSpring2012.pdf

UK
Production Accounting Forum: Best Practice Guide to Production Accounting w/ Appendix
http://productionaccountingforum.com/

All
Movie Magic Budgeting Software—Via Entertainment Partners (for budgeting, not for cost
reports or cost managing):
http://www.epcanada.com/Software/Budgeting.aspx

Cost Manager Reports Software via Microsoft:

https://www.microsoft.com/en-us/dynamics365/nav-overview

Thank you to John Choi, Nicolina Lanni, Al Morrow, Stewart le Maréchal,Kristina McLaughlin,
Yael Melamede and Karam Masri for offering their advice and expertise.

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 DETAILED BUDGET

BY THE NUMBERS

20% of the budget typically goes Above-the-Line (A)

30% to Production (B)

30% to Post-Production (C)

20% to Other (D) A budget template from Telefilm,

though created for fiction projects,
is the standard and accepted
budget template for documentary
in Canada.

Sample
$500,000 Budget

DEVELOPMENT BUDGET TIPS FOR

CANADIAN FILMMAKERS

To create your Development Budget, consider your

story rights, scenario and pre-production costs.
Typically, 15% of this total becomes the Producer
Fee and 15% becomes pre-production Corporate
Overhead. Producer and Corporate Overhead fees
paid out of development expenses must be subtracted
from the production budget.

Acct Category Total

1 Story Rights/ When you are acquiring story rights at the

Acquisitions development stage you may offer a nominal fee for
an “option.” It’s a percentage of what you will pay if
you get the project financed. Usually, if the project
goes into production, the rights holder is guaranteed
a percentage of the budget, plus a cut of any revenue.
Usually this is a percentage of B+C. You can sometimes
avoid paying high story-rights fees by acquiring the
rights for a token amount and hiring the rights holder
as a writer. Your broadcaster will eventually want
to see your rights agreement. This can also include
legal costs.

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2 Scenario This is anything to do with getting your script and • Fringe Benefits are CRA-source
concept completed, such as hiring writers and deductions. If your writer is not
researchers, as well travel and expenses connected incorporated and you are paying
to the writing of the script, including clearances or them a weekly salary, you have to
searches. For example, if you are basing your entire pay CPP and EI, and in some
film around a piece of stock footage or music, you cases EHT.
need to know at this stage if you can actually do that.
A scenario consultant is an expert you pay for advice
on a particular topic within your script that may need
to be checked for accuracy. A researcher gathers
information for the writer.

3 Development Costs This includes paying a production manager to do a

budget once the script is done, or paying for someone
to make sure your locations are secure, which might
include travel and living expenses. When you go into
production, any overhead you spend here is subtracted
from any costs incurred during production because
nothing can be claimed twice.

4 Producer This is 15% of lines 01-03. When you go into

production, this is subtracted from the producer fee
because it cannot be claimed twice. Usually there are
also overhead costs here as well: the costs that go into
keeping the production company going.

Total 100,000

PRODUCTION BUDGET TIPS FOR

CANADIAN FILMMAKERS

Acct Category Total

1 Story Rights/
Acquisitions

2 Scenario

3 Development Costs Overhead fees cannot be more than

10% of B+C .

4 Producer • Someone who is part of your

production company is capped
at earning 10% of B+C. If you
hire a producer who doesn’t have
any ownership of the production
company, they are outside the cap
and this rule does not apply.

5 Director There is no cap on the director’s fee, whether the

director is part of your production company or not.

6 Stars 0 In documentary, this is used for narrators/voice over.

TOTAL “A” – 100,000

ABOVE-THE-LINE

“B” – PRODUCTION

10 Cast 0 • Rights Payments: If you are working

with ACTRA, you pay a certain
rights payment, buyout or number of
plays, which is a one-time payment
that covers a specific length of time.
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11 Background 0
Performers (Extras)

12 Production Staff 0 This is everyone who works in the production office,

who works to get the production going and keeps it
going during principal photography. This is usually
paid as a weekly rate unless you are shooting day to
day. Researchers or visual researchers hired during
production might go here because they don’t have their
own line within production.

13 Design Labour 0 Usually for recreations or perhaps a title scene that is

not animation. Recreations are also applicable to lines
13-20.

14 Construction Labour 0

15 Set Dressing Labour 0

16 Property Labour 0

17 Special Effects 0
Labour

18 Wrangling Labour 0

19 Wardrobe Labour 0

20 Makeup/Hair Labour 0

21 Video Technical Crew 0 This is the crew for when you rent out a studio to do
interviews, recreations, discussion panels, etc.

22 Camera Labour 0 This includes director of photography, camera operators

and media managers, that is, someone who manages
drives, cards for cameras, etc. This also includes
all photography, including a still photographer for
promotion and marketing.

23 Electrical Labour 0

24 Grip Labour 0

25 Production Sound 0
Labour

26 Transportation 0
Labour

27 Fringe Benefits 0 These are very expensive and often forgotten until too • Fringe Benefits include Canadian
late. They can account for almost 20% of your labour Pension Plan, Employment
costs. Learn who from your crew is incorporated. If your Insurance, Employment Health Tax,
labour comes from an incorporated company, it means vacation pay and any union dues.
you don’t have to do source deductions, as they will do This amount is calculated based on
that from their own company. The payments you were all the labour costs above this line
going to make to the government for that person can be item. CRA sometimes does payroll
budgeted elsewhere. audits; check every one of your
suppliers and make sure anyone who
is not incorporated receives source
deductions.

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28 Production Office 0 This is for office rental only. If you claim something, • CRA considers that most of the
Expenses you need to also be able to support the entire amount things you might think you can
that you forsee in Corporate Overhead expenses. put here best fit under Corporate
Support entails receipts, but there are lots of office Overhead (line 72, Indirect Costs).
expenses that will not have been paid through Corporate Overhead covers hydro,
the budget—so better to default to line 72 to be safe. photocopying, phone, etc. and is
a guaranteed 10% of B+C. If you
are audited by the CRA and you’ve
already claimed in this line, you
cannot then support the Corporate
Overhead expenses in line 72. If
you don’t claim much here, CRA are
less likely to ask for your receipts
for things in the Corporate
Overhead line, because they can
assume you are not doubling up
on them.

29 Studio/Backlot 0 For if you are doing any recreations, panels,

Expenses interviews, title-card shoots. This is utilized more often
now, with new trends toward hybridized docs and
performed memory.

30 Location Office 0 This only applies to Location Office Expenses, not other • If you are working with an
Expenses location expenses. international co-producer, they
will have their own budget and
expenses. To reflect co-production
in your budget: one column shows
the entire budget, one shows the
Canadian expenses and one shows
your co-producer’s expenses, all in
the currency of your own country of
production. International budgets
do not have the same line items,
and their cost reports protocol may
be different, so timing and delivery
requires discussion.

31 Site Expenses 0 This might include anything you have to pay for the
benefit of entrance/access, e.g., museum fees, boat
rentals, security, tokens to the elders of the communities
with which you are working, etc.

32 Unit Expenses 0

33 Travel & Living 0 If you are filming locally you may pay for meals using • Standard per diem is approximately
Expenses catering, but if you’re travelling, it is best to have $65 within Canada, $85 outside
per diems. These may be flagged by evaluators—justify of Canada, for meals, laundry, etc.
with long production days and nights. Also falling into
this category is travel insurance, though some people
who travel a lot may have their own travel insurance,
so ask. This can also include paying for entrance visas
when applicable.

34 Transportation 0

35 Construction 0 Mostly for drama. Generally not used unless for

Materials recreations with a set. Applicable to lines 35-42.

36 Art Supplies 0

37 Set Dressing 0

38 Props 0

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39 Special Effects 0

40 Animals 0

41 Wardrobe Supplies 0

42 Makeup/Hair 0
Supplies

43 Video Studio 0 Video village. Mostly for studio drama lines 21-22.
Facilities

44 Video Remote 0
Technical Facilities

45 Camera Equipment 0 Rate depends on your equipment. This includes renting

equipment from the labour you hire for this role. If your
production company bought equipment for production,
you usually can’t expense the entire amount because
you can sell it or use it on other productions. You may
be able to expense a percentage of it to the production
company. The amount you can expense is a conversation
to have with your accountant. If you rent or sell any
equipment/items before the end of post-production, you
can put the money back into your budget. Applicable
to lines 45-48.

46 Electrical Equipment 0

47 Grip Equipment 0

48 Sound Equipment 0

49 Second Unit 0

50 Videotape Stock 0 In the modern age, this includes video cards and
viewing copies (DVDS). Most likely this includes Vimeo,
FTP, WeTransfer costs or subscriptions.
Also memory cards for cameras, etc.

51 Production 0 Not applicable unless using film.

Laboratory

TOTAL 150,000
PRODUCTION “B”

“C” –
POST-PRODUCTION

60 Editorial Labour 0 Includes your post-production supervisor, who

coordinates the editors, stock footage, outputs,
61 Editorial Equipment 0 deliverables, etc., as well as editors, assistant editors,
translators, interpreters, dialogue and transcription,
sound effects, music editors and looping supervisors. If
the director is doing the editing, this is split up into the
Editorial Labour and the Director lines.

62 Video 0 Your distribution or broadcast copies. If you go to a • For post-house bills (picture and
Post-Production colour-correcting house for your online edit, they may sound), it is helpful to break out
(Picture) do a breakdown of costs in the bill. labour and equipment costs. You
may be able to claim tax credits on
eligible labour.

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63 Video 0 Also one quote/bill. • They may break it down for
Post-Production you the Telefilm way or their
(Sound) own way.

64 Post-Production 0 Not applicable unless using film.

Laboratory

65 Film Post-Production 0 Not applicable unless using film.

Sound

66 Music 0 Typically music is licensed or you hire a composer and

music supervisor. Music clearances go under Music
Rights and should cover theatrical release, broadcast
and online streaming. This is negotiated in your contact
with the rights holder. This negotiation is usually done
by a music supervisor, who can often negotiate cheaper
rates. Speak to rights holders about the possibility
of a Most Favoured Nation deal for music, in which all
music is the same rate.

67 Titles/Opticals/ 0 A visual researcher finds and negotiates for archive,

Stock Footage/Visual stock footage and visual materials. This line can also
Effects include opening/closing credits, graphics, lower thirds,
special effects/licence for stock footage (individuals,
companies, Getty Images and other aggregators). The
realities of the cost of music/visuals can be a problem
area. It is best to talk to a visual researcher on a
consultant basis early on to estimate these costs. If you
are using an individual’s home video, it is best to make
a reasonable offer to the owner.

68 Versioning/Closed 0 Closed captioning is now standard for broadcasters.

Captioning If you are delivering both a one-hour and a feature
version, for example, this is broken down into your post-
production costs and distinguished as separate from
one another.

69 Amortization (Series) 0 Not applicable (it’s for using the same set over again,
usually in drama series).

TOTAL POST- 150,000

PRODUCTION “C”

TOTAL “B” + “C” 300,000

(PRODUCTION
AND POST-
PRODUCTION)

“D”

70 Unit Publicity 0 This is for hiring a publicist, publicity shots, etc., which • Fringe benefits: Include CRA
can also go into Camera Labour. Budget for a still deductions and EHT if they are on
photographer if you can! Also budget for marketing/ payroll. Contractors may pay
distribution elements in your post-production budget: it themselves when they do their
festival submission fees, film website/poster/trailer/ own taxes.
titles cards and other promotional elements, audience
engagement strategy and outreach. An interactive
budget requires its own budget.

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71 General Expenses 0 To determine interim financing look at the cash flow • You require liability insurance., i.e.
over your production to estimate how much money you the Entertainment Package and the
need to borrow. Remember to budget for interest and General Comprehensive, as shooting
set-up fees as well. You are not only required to cover locations (e.g., museums) require it.
your portion of the legal fees in interim financing, but It also covers your production staff
also the bank’s legal fees. Get a lawyer early to get a if something should happen (to a
quote for your interim financing contracts and E&O. certain point, e.g., injury), covers your
Lawyers also watch a rough cut for E&O: Your lawyer equipment and, in some cases, covers
tells the E&O lawyer to let the insurance company know lost days if something breaks and
the project will be approved for E&O. There are two stalls production.
E&O lawyers in North America. Some broadcasters
• Medical Fees provides special
want to know you have E&O insurance from delivery,
coverage for irreplaceables in your
and some from principal photography.
production like your narrator or
director, if something happens to
them which shuts down production.
• Legal Fees are E&O Insurance,
interim financing contracts and any
contracting or financing agreements
you need looked over.
• Post-Production Accounting is
for any help you may need from
an accountant to put information
together for the audit.
• Bank Charges are charges to set
up a bank account for a production.
An audit fee can be more than
$10,000 (depending on the budget)
and is required for budgets over
$500,000, when the CTF and TFC
require an audited final cost report
accompanied by an independent
auditor’s report. For an audit, you
have to show all your general
ledger, all accounts payables,
accounts receivables, all financial
contracts, all your bills, cheque
stubs, bank statements and HST
returns. Production budgets between
$200,000 and $499,999 require a
Review Engagement Report, which
is a final cost report accompanied by
an independent public accountant’s
review engagement report.

72 This is for office This is where your office expenses go (see notes in line
rental only. If you 28). This is 10% of B+C. Usually taken as a whole by
claim something, you the parent company.
need to also be able
to support the entire
amount that you
forsee in Corporate
Overhead expenses.
Support entails
receipts, but there
are lots of office
expenses that will
not have been paid
through the budget—
so better to default
to line 72 to be safe.

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 TOTAL OTHER “D” 100,000

TOTAL “A” + “B” +

“C” + “D”

80 Contingency 50,000 Between six and 10% contingency is standard. Usually

65% ends up in production, 35% ends up in post-
production. If there is any left, you will have to spend it.

81 Completion 0 • According to Telefilm this is

Guarantee protection acquired or offered
by a completion guarantor which
guarantees completion and delivery
of a production and which, if
the production is not completed,
ensures that investors and financial
partners in that production will
be reimbursed. More typical with
narrative features with large
budgets or fickle key cast/crew.

GRAND TOTAL 500,000

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