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CMF Application Q&A
If you’ve read our previous newsletter, you know that we received funding from the Canada Media Fund last year to develop a prototype for Project Ghost. Someone reached out to us on Twitter with additional questions about applying to the prototyping program, and with their permission we will share them here along with our responses.
Please note that we are not affiliated with the CMF, and we are only sharing our experience. We recommend that you get in touch with a CMF analyst to confirm any advice that we share below.
Question 1: How does the 25% of the budget that is not covered by the grant work?
For those that may not know, the CMF funds up to 75% of the prototyping budget up to $250K. Therefore, the applicant must cover 25% of the remaining budget.
There are two main ways to go about this:
- If you have the resources, you can contribute the funds directly to the project.
- You can use salary deferrals as shareholders of the company. (Note that you can only defer as a shareholder). This means that you will pay a shareholder X amount of money for their role(s), but they will defer a portion of that to cover the 25%. There are different strategies for doing this. For example, you can put the same shareholder for more than one role like Producer and Art Director, and defer one of those salaries. However, deferrals are more risky in the eyes of the CMF and might play against you. For Project Ghost, we were deferring $88K of salaries (and still paying ourselves decent wages ~50K a year)
Question 2: Can we use other grants or sources of funding to fill the gap?
For sure, that could make your financial stability stronger in the eyes of the CMF. You might have to get creative if that grant is not confirmed when you apply though, as they might question your ability to pursue the project if you were to not receive that funding.
Question 3: Does there have to be proof those funds were spent, or can it be contributed in the form of things like unpaid wages (such as if I work 40hrs/wk but only pay myself for 20)?
You will need to do proper accounting and bookkeeping of the CMF funds as usual. The CMF also requires a review engagement with an accountant to “confirm” how you spent those funds. We are currently in this process, and it sounds much more intimidating than it actually is. We can talk about this more if you get the grant.
As to your question about working 40 hours, but only paying yourself for 20 hours, that would be a salary deferral. However, think of it more like responsibilities and work completed rather than hours. For example, you could put yourself down as a game designer and art director full-time and defer one of those salaries. It might seem counterintuitive, but that’s how deferrals work in our experience. Don’t be scared to pay yourself a decent wage!
Question 4: Do I have to specify in the budget what costs will be using CMF funds and what costs will be using the other 25%?
The short answer is no. However, there are certain rules to follow for specific sections of the budget like the corporate overhead and contingency funds. Corporate overhead is literally anything. You could spend it on a vacation if you wanted (probably shouldn’t though…). Contingency must be spent on approved line items in your budget. For example, if you budget 20K for a programming contractor, but at the end of the project it cost 28K, you can use contingency for the 8K.
Question 5: My understanding is that if we should decide not to continue with the project at any point the funds would not have to be paid back, is that correct? (Besides potentially unspent funds that have been provided but not spent and therefore may need to be returned to the CMF, I assume)
That is correct. Once you have gone through the prototype phase and submitted your final report, you could decide not to pursue the project further and not pay it back. If you need to drop the project during the prototyping phase, I don’t know what happens then. You might become in default with the CMF and then the consequence are probably case by case at that point.
Question 6: If we get the prototype funding but then fail to get the production funding or decide not to pursue it for some reason, is there any way to continue with the project without having to pay back the CMFs contribution?
To my knowledge, you can ask the CMF to keep developing the project part-time and defer 100% of salaries until it is finished if you cannot secure production funding or a publishing deal. Those agreements are on a case by case basis. In any case though, if you start selling the project, you must pay back the CMF according to their schedule. Their terms for production funding are 15% of gross sales revenue for 7 years regardless of if you pay it back completely or not. For example, if you pay it back within a year, they will keep taking a cut as profit for the next 6 years. If you make barely anything, they will take 15% of that for 7 years and you will be off the hook after that.
Question 7: Does the CMF have or exercise any creative control over the projects?
They won’t fund anything “extreme” like sexually explicit content or super violent or discriminatory stuff. But other than that, no.
Question 8: Are we able to apply starting with the second opening date, or do we have to wait until next year at this point?
For those that may not be familiar with the program, there are two application intakes every year. For this year, the deadlines to submit are May 18 and October 12.
Yes, you can apply in the spring or fall or both if you want. No need to wait until next year.
Question 9: For tax purposes, is CMF funding considered income?
Question 10: Do you have any other tips you think would be valuable to know? Things to look out for, things that increase or decrease the chance of a successful application, things to keep in mind or plan for, etc?
We wrote a newsletter about some of our tips for a successful application. You can find it here.
My main advice is to start drafting early and ask for lots of feedback. I could recommend someone that does application reviews if you want. We worked with her on the application we submitted last week, and we were very satisfied with her work.
You can find more info on the program on the CMF’s website here.
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