News & InfoEP StoreAcademySupportCommunityProducts by Country
Blog Home

The Beginner's Guide to Hybrid Film Financing

How to successfully navigate working with foundations and investors to finance your next social-impact project
November 3, 2021

John Hadity

Beginner's Guide to Hybrid Financing-John Hadity-2

Putting together your project’s financing plan may feel like a puzzle. There is often more than one way to raise funds, and today, most productions are made using a variety of fundraising methods. Hybrid film financing is one option to consider in the funding process, especially for projects with notable social impact, and I’m here to help you put the right pieces together to complete your final picture and get it in motion.

What is Hybrid Film Financing?

Hybrid film financing combines customary for-profit funds (e.g., equity) with not-for-profit elements. One such element is known as a Program Related Investment (“PRI”).

PRIs can be made in the form of loans, equity investments, bank deposits and guarantees. Like traditional grants, the investments are used to support projects that fulfill an IRS-recognized charitable purpose. Unlike grants, PRIs are designed to be repaid to the donor, usually along with a modest amount of interest or other type of financial return.  Recipients must be able to generate revenue through fees or earned income to repay PRIs.  They are provided by foundations and nonprofits who can be strategic partners in making your project a success. Some may have significant funds available to filmmakers, who have set up a non-profit element to their production financing plan, for projects that are directly in line with the mission of the organization giving the grant.

How Much Money is Available to Filmmakers?

Is hybrid financing the same as applying for a grant? Not exactly. Most productions can apply for grants which are typically between $5-10K. But, what if you need more?

That’s when hybrid financing comes into play.

Choosing the hybrid financing route means tapping into hundreds of organizations, places like The Ford Foundation, MacArthur Foundation, and Skoll Foundation who have the funding to make a much larger contribution to your project, possibly even upwards of $250K+.

Even if you’ve raised a significant amount of your funds through equity financing and are still left with a gap, hybrid film financing could be a crucial component to successfully reaching your fundraising goals. That’s why it’s important to understand how to qualify while you’re in the early stages of your project’s development, so you have this available as a financing option.

How Hybrid Financing Works

Anytime an organization is considering a project to fund, there are many factors for them to weigh before they give out any money. Usually, they want to know that your project is aligned with the mission of their organization.

Additionally, it may include a combination of restrictions, requirements, recordings, progress reports, film copies shared, or screen credits as part of the agreement.

If a movie gets made and it doesn’t sell, the loan might be treated as non-recourse (meaning “forgiven”). But, if it does sell, the funds come back to the organization, the loan is repaid, and that organization can then use those funds for another production as a “pay it forward” cycle of funding.

How to Qualify

If you decide to pursue hybrid financing, you should weigh a few factors early on in developing your project because it may disrupt your production plan down the road. Pursuing hybrid financing opportunities right away may inform you on how to select your talent and crew members, with the intention of keeping the film industry progressing forward.  

Here are two questions to ask:

1. What organizations would care about the story and crew behind my project?

  • A foundation may only give money to productions that show true diversity in race or gender, or if your production’s story is aligned with their values and mission.

2. What’s required of me to receive the money?

  • For example, some foundations may require you to have a fiscal sponsor or you may even need to set up a 501(c)3 in order for them to give you funds.

What is a Fiscal Sponsor?

Setting up a 501(c)3 can be a huge undertaking for a producer so, most often, producers will seek out a fiscal sponsor.

Fiscal sponsors are non-profits who agree to act on behalf of a production as the gateway for receiving the funding, and allows you to reach a wider audience because donors can get a tax write-off.

How Fiscal Sponsorship Works

  1. You partner with a non-profit (for example,The Gotham) that is aligned with the mission of your project.
  2. The non-profit acts as your fiscal sponsor, who will receive the funds from a foundation (i.e. The Ford Foundation) or from individuals who want to donate and receive a tax write-off.
  3. The non-profit will take a certain percentage for processing the check, as well as for handling all the government reporting on your behalf, and then send the remaining balance to the production.

Are There Corporate Structure Limitations?

In hybrid financing, you don’t want to co-mingle equity funds with non-profit funds. Here are a couple of different ways to keep them separate:

Set up a 501(c)3: If you decide to set up a 501(c)3, you can’t take on equity investors. Instead, you will need to set up a separate legal business entity, and have a contractual relationship between it and your 501(c)3 to receive non-profit funding.

Set up a C-Corp: If you end up finding a fiscal sponsor instead, those funds can’t go directly into a legal business entity that you set up for equity financing. Instead, you’ll want to set up a C-Corp to receive the fiscal funds that are also under the control of the producer. Then you would have a production service agreement between the C-Corp and the legal business entity to allow the C-Corp to get the money from the fiscal sponsor and that then moves that money into the legal business entity.

As with any financing option, there’s a lot of research involved and different factors to consider with hybrid film financing. But don’t let that scare you from making it a significant part of your production finance plan. With a wealth of knowledge in this space, our expert finance team is here to advise you on the best corporate structure for your production. We’ll even connect you with local and international fiscal sponsors to ensure your project gets made on budget. Reach out to us today!

For additional production financing insight, be sure to check our Master Series webinar on hybrid financing, and read up on our Beginner’s Guide to Production Financing.

Related Content

International Film Financing panel-featured

Film Financing Explained: International Financing

3/10/2022
International production experts discuss how producers can utilize financing systems outside of the US,...
Watch
International Financing-John Hadity-ft

The Beginner’s Guide to International Film Financing

2/15/2022
What to know before you begin an international financing plan
2022 Budgeting-sq

Budgeting for 2022: A Production Accountant's Guide

12/15/2021
EP's Payroll Tax, Production Incentives, and Business Development experts explain how inflation,...
John Hadity-Sandra Schulberg-Hybrid Financing Master Series

Film Financing Explained: Hybrid Financing

10/27/2021
Sandra Schulberg joins John Hadity for a spirited discussion on Hybrid Financing and how filmmakers can...

Film Financing Explained: Soft Money Financing

9/2/2021
Vivian Hua joins our panel of financing and incentive experts to discuss funding film and television...
 John Hadity-Guide to Soft Money Financing-sq

The Beginner’s Guide to Soft Money Financing

8/25/2021
How filmmakers can capitalize on incentives, film funds, and more to finance their next project
EP Blog_SQUARE_World Revenues

The Beginner's Guide to World Revenues, Foreign Sales, and Senior Debt

5/17/2022
Learn how shopping your project around the world to secure funding commitments for distribution rights can...
KJ Lamb and Simon Donovan

Empowering the Next Wave of Production Accountants

5/2/2022
The EP Production Portal team was delighted to participate in the biannual Netflix Assistant Production...
Master Series Panelists-World Revenues, Foreign Sales, Senior Debt

Film Financing Explained: World Revenues, Foreign Sales, and Senior Debt

4/27/2022
Learn how working with agents, international distributors, and gap financiers can all factor into...
EP Blog_SQUARE-Tips for tax day

Tips for Tax Day 2022

4/5/2022
Your ultimate tax filing checklist - the deadline this year is Monday, April 18th!
EP Newsroom-Thumbnail-Portland Business Journal

How Oregon’s updated film incentive law could boost the local economy

3/29/2022
A new Oregon film and media incentive law could draw more movie productions to the state.
Master Series Women in Animation-thumbnail

Women in Animation: A 3D View

3/24/2022
Marge Dean, Mandy Tankenson, and other women leaders from across animation come together to celebrate...
Bradley Cooper-nightmare alley

Meet the Assistant Director

3/16/2022
A conversation with Myron Hoffert ('Nightmare Alley')
EP Blog_SQUARE-Sound Mixer-Lora Hirschberg

Meet the Sound Mixer

3/1/2022
A conversation with Oscar-winning re-recording mixer, Lora Hirschberg ('Inception', Skywalker Sound)
Digging Out of a Deficit-featured

Digging Out of a Deficit: What to Expect in the Second Quarter of 2022

2/25/2022
Federal and State Unemployment Insurance rates are rising. Learn how these changes will affect 2022 and...
meet-the-executive-producer-just-mercy-sq

Meet the Executive Producer

2/8/2022
A conversation with Mike Drake ('Just Mercy') on the path to becoming and EP, and the role of social...
EP Blog_SQUARE_Island Incentives

A Ticket to Paradise

1/26/2022
Island Incentives Bring Productions Ashore
EP-Blog-Meet-the-Set-Decorator-2

Meet the Set Decorator

1/19/2022
A Conversation with Claire Kaufman ('Little Women')
35-production-accounting-terms-feature

35 Production Accounting Terms You Should Know

1/11/2022
Ready to test your production accounting vocabulary knowledge? See how many of these 35 common terms you...
creating-a-winter-wonderland-elf

Creating a Winter Wonderland

12/21/2021
How ‘Elf’ Production Designer, Rusty Smith, Produces the Perfect Snowy Scenes for Film and Television
Shiran-Amir-Randy-Bricker-Meet-the-Editors

Meet the Editor

12/7/2021
‘Chucky’ editors Randy Bricker and Shiran Amir on navigating the entertainment industry and how they...
EP BLOG_Payroll_Cleanup_Becky_Harshberger_sq

Everything You Need to Know About End-of-Year Production Payroll Cleanup

11/30/2021
Reconciling payroll errors and generating accurate W-2s can be a tedious process. These proactive steps...
film-budget-meeting-sq

Why Accurate Payroll Tax Withholding Matters to Film Budgets

11/16/2021
Wendy Black, EP’s Vice President of Incentive Operations, shares tips for ensuring your production...
Best Practices for Year-End Payroll Cleanup-Panelists-sq

Best Practices for Year-End Payroll Cleanup

11/15/2021
Payroll tax expert Becky Harshberger shares best practices to help production accounting teams prepare for...
Master Series Thumbnail-Best practices for accurate payroll tax withholding

Best Practices for Accurate Incentive Payroll Tax Withholding

10/22/2021
Learn how payroll tax withholding impacts a production incentive or film tax credit, and how productions...
Identity Security Film Production-sq

Identity Security in Production

10/13/2021
5 Strategies to Manage Risk and Resist Cyberattacks in the Entertainment Industry
5 top payroll tax errors-Becky Harshberger

5 Top Payroll Tax Errors and How to Prevent Them

9/28/2021
Production payroll can be a daunting task, but it doesn’t have to be! Payroll Tax expert Becky Harshberger...
Canadian flag

5 Things to Know Before Working in Canada

8/31/2021
Prepare for your next job in Canada with this checklist of payroll considerations
Topic: Canada
More
EP Blog_SQUARE_Fighting Hollywood Stereotypes-TTEI

Fighting Stereotypes and Rethinking Representation

5/10/2022
How TTIE is advancing authentic storytelling in Hollywood by empowering historically excluded writers and...
Oklahoma route 66 sign

A New Frontier in Filmmaking

5/5/2022
Oklahoma is becoming a production destination, thanks to new incentives and infrastructure programs.
contracting-in-a-covid-19-world-LC

Contracting in a COVID-19 World  

5/3/2022
The pandemic has affected how UK production companies contract crew. Here’s how to reduce the impact of...
terms-to-include-uk-contracts-LC

Terms to Include in UK Crew Contracts

5/3/2022
Common terms which studios and production companies include in their UK crew contracts.
Topic: UK
More
uk-gdpr-and-how-productions-reduce-exposure-LC

The UK GDPR and how Productions can Reduce their Exposure - Q&A with Sheridans

5/3/2022
Sheridans’ Associate Krishan Neelendra answers key UK GDPR questions from production companies and...
Topic: UK
More
cell phone with sticky note stating sign here

Six e-Consent Myths (and Why They’re Not True)

5/2/2022
Sheridans Associate, Sarmad Saleh, debunks some common e-consent myths.
Topic: Legal
More

Producing with Purpose

4/27/2022
Creative Producer, Kimberly Goodman ('Selling Sunset', 'Project Runway'), shares insights on creating...
recycling conversation

Sustainability in Production: Q&A with Nikki Saunders

4/22/2022
Nikki Saunders on sustainable filming practices, COVID-19, and why carbon offsetting isn’t a...
EP Blog_The Race to Net Zero is On for Big Studios

The Race to Net Zero is On for Big Studios

4/20/2022
Film and television studios are embracing the green movement in a big way. Here’s what you can expect to...
EP Blog_SQUARE_meet the cinematographer-dan-laustsen

Meet the Cinematographer

4/12/2022
A conversation with Dan Laustsen ('John Wick', 'Nightmare Alley').

Georgia Proposes Capping and Prohibiting Sale of Film Tax Credits

3/30/2022
The changes, if signed into law, would cap the amount Georgia hands out in film and TV tax credits at $900...
EP Blog_Marge Dean

Opening Career Doors

3/29/2022
How WIA President, Marge Dean, is shaping the future of animation and empowering underrepresented genders
Anthony De La Rosa-EVP-Residuals

Spotlight: Anthony De La Rosa, Executive Vice President, Residuals

3/8/2022
Meet EP’s resident residual domain expert, Anthony De La Rosa, and learn what inspired him to enhance and...
Los Angeles Times logo-sq

Why the Cherokee Nation is Offering Rebates to Film in Oklahoma

2/5/2022
Joseph Chianese speaks to the LA Times on new incentive
EP BLOG_Decoding-Your-Paystub-S

Decoding Your Paystub in 2022

2/2/2022
What deductions may look different in the new year

PayTalk: The Recipe for a Successful Payroll 2022 (Part One)

1/13/2022
Davida Lara joins the PayTalk podcast to share strategies for leading successful teams
Future-of-production-virtual stages

The Future of Film and Television Production

1/4/2022
Virtual stages, remote production offices, and other advances in technology drive the evolution of...
Master Series: Budgeting for 2022-1

Budgeting for 2022: What Productions Need to Know

12/10/2021
From unemployment taxes and worker's compensation to the price of labor and materials, production costs...
Kickstart-with-ep-academy

Kickstart Your Production Career with the EP Academy

11/23/2021
From Production Accounting basics to technology certifications, EP’s online courses offer one-of-a-kind...
Psychology-of-terror-steve-wang-todd-masters-feature

The Psychology of Terror

10/29/2021
How our deepest personal fears inspire cinematic monster makers Todd Masters and Steve Wang
woman-man-filming-production-sq

Mission: NOT Impossible

10/20/2021
Production incentives give producers options, increase infrastructure development and jobs promoting...
Christine Davila, Jairo Alvarado, Sonia Gambaro

Authentic Latinx Storytelling Starts with Inclusion

9/22/2021
Christine Dávila, Jairo Alvarado, and Sonia Gambaro work to amplify the talents of underrepresented...

Streamers and the Changing Landscape of Film Distribution

9/14/2021
Director/Producer Daniel Farrands on strategies for success in the time of VOD

Meet the Paymasters

9/9/2021
The hard-working payroll professionals behind Hollywood's paychecks

How to solve a compounding problem?

9/8/2021
The perennial shortage of production accountants has been made worse by the competition for resources, but...

New Terms Under Return-To-Work Agreement

8/30/2021
RTW extension includes new two-part delineation, and the role of the vaccine
Topic: Legal
More
 Adjusting the W4-Becky Harshberger-Sq

How to Adjust Your Tax Withholdings Using the New W-4

8/17/2021
Making small adjustments throughout the year can save production workers big at tax time!

Designing for Horror

8/13/2021
Daniel Farrands and Andrew Murdock share insights on how filmmakers create fear through visual techniques

Digital Production Studio

Production Finance StudioProduction Management StudioEnterprise Management Hub

EP Sites

Central CastingEntertainment PartnersEP StoreSyncOnSetThe Production CommunityWe Got POP
Subscribe now

Be an industry insider with EP's
newsletters and alerts

LegalPrivacy NoticeSecurity
© 2022 Entertainment Partners. All rights reserved.