Zach Braff, Hollywood rich person, has explained why he set up a Kickstartercampaign to crowdfund his next film-making effort: He's not a billionaire.
"People seem to think I have Oprah Winfrey money," Braff told the LA Times, defending his decision to solicit donations toward the production of his new movie, "Wish I Was Here." "I've done well in my career, but I am not sitting on $22 million" -- a sum that's been circulating online as an estimate of Braff's net worth. Oprah Winfrey's net worth was reported by Forbes to be $2.8 billion as of March 2013.
I was about to sign a typical financing deal in order to get the money to make "Wish I Was Here," my follow up to "Garden State." It would have involved making a lot of sacrifices I think would have ultimately hurt the film. I've been a backer for several projects on Kickstarter and thought the concept was fascinating and revolutionary for artists and innovators of all kinds. But I didn't imagine it could work on larger-scale projects. I was wrong.
What changed Braff's mind was the recent Kickstarter campaign to fund a film version of "Veronica Mars," the television show starring Kristen Bell as a young private investigator. The show's creator raised more than $5.7 million, drawing on the largest number of backers in Kickstarter history (91,585) and far exceeding expectations.
Normally, those who put up the money for a movie are entitled to make their money back, plus profits, if the project is a financial success. (Granted, in the usual model, investors can't put up a measly $1.) Not so in the case of these Kickstarted films: Braff promises his benefactors a tiered structure of rewards, none of which involves return on investment. They range from the trivial -- contribute $40 and receive a "Wish I Was Here" T-shirt -- to the participatory -- send thousands of dollars towards the realization of Braff's ambitions and he'll allow you to name a character, offer advice after screening the director's cut, or play a walk-on role. The last of these, which was available to one deep-pocketed admirer for a pledge of $10,000, has already been claimed. But eight out of 10 "visual effects made possible by" end credits are still available, for $9,000 a piece.
Braff's Kickstarter is on track to reach its goals rapidly. As of this writing, the campaign has raised more than $1.8 million toward its goal of $2 million, in just two days. But as the Kickstarter method proves its worth for established entertainers like Braff and Bell, a backlash is starting: "A dollar for Braff is a dollar away from an unknown," The Guardian's film blog argues. And Braff's defense -- that he may be rich, but he's not that rich -- is tough to take seriously from an actor who made $350,000 an episode while starring in "Scrubs," as Entertainment Weekly reported in 2007.
If someone has money to burn and wants a chance to hang out on a movie set, and happens to be a big Zach Braff fan, it seems harmless enough. But there's something exploitative about selling low-level access to the movie business, a highly insular industry that many people want desperately to enter. One of Braff's reward packages, for those who give $5,000 or more, promises to make five fans his "personal guests at the premiere and afterparty." This offer is already sold out. One wonders what those donors want to gain from their pledges: Just a good time with an actor they admire, and maybe an extra dimension to their enjoyment of the film? Or are they hoping for a lasting benefit from their investment?
Riches to Rags: 5 Tales of Woe From Those Who Had It All and Lost It
Zach Braff Defends His Movie Kickstarter: I'm Not Oprah
Guadiano worked with a pro athlete in San Antonio in his mid-40s whose road into hard times was paved with the purchase of too many toys, and a failure to plan for retirement.
The athlete came to Guadiano with $100,000 in credit card debt, $200,000 in loans for two sports cars, a $200,000 loan for a luxury cabin cruiser, and a look of terror on his face. His sports career was at an end, and he had attempted to get a job with a life insurance company. But he was turned down when his prospective employers saw his credit report.
Initially, the athlete started a debt management plan with fixed payments to eliminate his debt, but since some of his toys had been repossessed and he had judgments for non-payment of other bills, he eventually dropped out of the program and declared bankruptcy.
Guadiano saw him recently and said he seems happy without the trappings of the high-profile lifestyle and is gainfully employed at a nonprofit company that works with cancer survivors.
Ashley Adami, a certified credit counselor with ClearPoint Credit Counseling Solutions in Portland, Ore., worked with a woman in her late 40s who lived off a monthly income from a trust fund, but had accumulated $300,000 in gambling debts.
"She lived in a home with a lot of home equity and a small mortgage, plus she owned a second property without any mortgage," says Adami. "She came to me because she had a gambling addiction and her therapist told her to get some financial help."
The woman's credit score had plummeted, yet her favorite casino continually loaned her money to cover her gambling because they knew she had assets to sell. In the end, she sold her second home to pay off her debts. Her credit improved and she was able to refinance and keep her primary residence. She also found a full-time job. While this woman didn't end up in rags because of the cushion of her trust fund, she needed to make some dramatic transformations to her life in order to clean up her debt problem.
"Although she still struggles with her gambling addiction, it's under control now and she's much happier working full time," says Adami. "Not only is she earning a living, but she's keeping busy and feeling productive."
Another of Guadiano's clients, a high-ranking noncommissioned military officer, was making a good income, but got caught up in buying expensive furniture for a new home, a costly car, and a high-end truck. He wasn't eligible to reenlist, and so he retired at an income that was about half his previous salary.
"He struggled with a debt management plan for about a year," says Guadiano, but then he wound up getting a job as an overseas security advisor through his military connections. He went back to Iraq and earned enough money to pay off all of his debts.
"He's a lucky guy to have had the connections to bring in the income to get him out of the hole," says Guadiano.
Mary Ellen Nicol, a credit counselor with CredAbility in Atlanta, is working with a client who owns a public relations firm.
"In September 2012, my client lost his major client, a restaurant chain that was paying him $27,000 per month for his PR services," says Nicol. "His income went from $30,000 a month to $3,000 a month."
The client used his $40,000 in savings to stay current on his mortgage and for other living expenses, then began putting all his expenses on his credit cards, but finally turned to CredAbility for help.
At that point, says Nicol, he was two months past due on his mortgage. He couldn't qualify for a loan modification because the payment was about the same as his income from his remaining PR client. Nicol and the client are currently requesting a reduced payment due to his reduced income.
Bruce McClary, currently director of media relations for ClearPoint Credit Counseling Solutions in Seattle, worked with a debt collection agency in Los Angeles where he saw the sad aftermath of fortunes frittered away.
"An actor who had been popular in the 1970s and had earned millions was living off the residuals from some TV roles and the income generated by several properties," says McClary. "One of the homes, a $2 million mansion, was destroyed by a natural disaster."
Although there was insurance on the property, the special coverage needed for that particular disaster had lapsed. The property was a total loss, sending the actor's already shaky finances into a tailspin.
The debt collection company McClary worked for eventually collected a 50 percent settlement the portion of the actors debt that concerned them -- a second mortgage on one of the actor's properties -- but most of the actor's fortune had evaporated by the time the actor died from an illness.
"These situations remind me of similar circumstances that happen to lottery winners, sometimes referred to as 'sudden wealth syndrome,' when people who come from modest means are suddenly thrust into the limelight of fame and fortune," says McClary. "If they weren't prepared with core financial skills, their financial security is at risk."
The biggest lesson that everyone can take away from these tales -- whether they come into sudden wealth or not -- is the importance of living within your means.
"Fame is fleeting, so those reaching the top should think about how to make their newfound fortune last a lifetime. Otherwise, it can disappear faster than it arrived and can even turn into some serious debt," McClary says.