Crowdfunding Across the Arts

Crowdfunding is now an important way for artists and creators to seek funding for their projects. In 2013, Arts Law published an information sheet, Cross platform creativity – online and digital media, which covered the role of crowdfunding in financing computer games and mobile apps.  Arts Law’s NEW Crowdfunding information sheet expands the topic to recognise that seeking donations or pledges of support is actually relevant to most art forms.

For example:

  • Afaan Publications in Melbourne obtained pledges of just over A$67,000 on to publish 4 children’s books in the Oromo language (the language of people from Ethiopia, Somalia and Eritrea) for use by the Oromo community in Australia and internationally.
  •  5 Lives Studios in Brisbane were supported by 15,029 backers who pledged over A$930,000 on to fund Satellite Reign, a strategy based computer game set in a cyberpunk city.
  • Arts Tasmania has partnered with Pozible to provide the Crowbar crowdfunding incentive program designed to allow Tasmanian artists, or collaborations between artists with at least one Tasmanian member, to take creative risks to test whether there is a market for their ideas. The Crowbar program is available until 30 November 2015.

While some artists and creators are looking for a donation from supporters, others will find ways to reward the pledgers. When the project results in a product for sale, then the promised ‘reward’ can be a copy of the completed project, so that the creator is essentially seeking pre-publication orders and using the money to fund the costs of the project. There are a stack of crowdfunding platforms to choose from including specialist crowdfunding platforms such as for music (which is by invitation only) and, which lets authors post proposals for books and fans can make pre-publication orders.

The 2015-16 Federal Budget has significantly impacted on the funding available to the Australia Council for the Arts, so artists and creators need to consider other funding opportunities.  Arts Law’s Crowdfunding information sheet provides guidance on the pros and cons of using crowdfunding platforms and the tax and other legal implications of financing projects through crowdfunding.

The information sheet also guides the reader through the important differences between donation-based and reward-based funding as compared to investment-based or debt-based funding. Any investment-based or debt-based funding model would involve offering a ‘financial product’, fundraising through ‘securities’, or a ‘managed investment scheme’, all of which are regulated by Australian Securities and Investment Commission (ASIC).  However, ASIC has confirmed that donation-based and reward-based funding strategies are not subject to regulation under the Corporations Law. This leaves artists and creators to develop interesting rewards for potential pledgers, for example, providing contributors with a copy of your album or using contributors as the basis for characters in your game or inviting contributors to the opening night of your film.

NOTE: Following the Treasury Department’s Crowd-sourced Equity Funding discussion paper (December 2014), the legislation and regulations relevant to crowdfunding to secure an investment may be revised in the future. The Treasurer’s 2015 Federal Budget speech stated that “to help small business grow, we are facilitating new opportunities for crowd‑source funding, making it easier for small investors to marry up with growing small businesses.” Arts Law will keep you informed of any updates.

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