In April, the collapse of Participant Media sent shockwaves through the film industry. How could a 20-year-old company—with box office hits such as An Inconvenient Truth and The Help and 21 Oscars, including two Best Picture winners (Spotlight, Green Book)—close its doors without warning? But earlier that same month, another nearly two-decade-old indie film company made a surprising move that offers potential answers to what happened, how the film industry is changing and how well-meaning financiers are reacting to it. Cinereach, a longstanding nonprofit that has supported hundreds of indie films through grants, financing and mentorship, announced a major shift from auteur cinema booster to “media incubator.” As Cinereach’s new CEO, Jennifer Strachan, says, “We’re definitely not just a film company now. We may end up supporting films, but only if the research leads us that way.”

Participant and Cinereach represented two ends of “independent film”—the former boasting a 100-person staff and star-driven multimillion-dollar projects, the latter known for producing smaller indies such as After Yang and Beasts of the Southern Wild and nurturing budding auteurs (Damien Chazelle, Eliza Hittman, Barry Jenkins). Yet both had similar altruistic goals—to foster risk-taking, impactful work—and both came to similar conclusions about the current marketplace: Something had to give. 

Participant’s changemaking philanthropist, eBay’s billionaire first president and employee Jeffrey Skoll, decided to close shop entirely. The New York Times quoted an email Skoll sent to employees, relaying a possible motivation: “The entertainment industry has seen revolutionary changes in how content is created, distributed, and consumed.” In other words, if films don’t reach people the same way and make the same kind of impact as they used to, it is time to shift focus. Similarly, Cinereach founder and executive director Phil Engelhorn says the company “already felt our role necessitated a shift” even before the current crisis. “There is now so much more opportunity for independent thinkers and voices to find audiences that the very purpose of independent film—to explore narratives and stories outside the mainstream—is different,” Engelhorn explains in an email. “Pair that with the upheavals in the film business, and we have this double existential crisis.” 

As producer Shrihari Sathe (Beach Rats), winner of a 2016 Cinereach Producer Award, notes, “art film as change agent” is not what it used to be. “It’s not enough to make the film,” he says. “How do you generate the audiences and create pathways for the work to be disseminated?”

Indeed, a producer who has worked with Participant and Cinereach lays the blame for the current shifts not on wary financiers but on distributors. “The distributors have lost faith in the art film,” he says. “I don’t know if it’s uncertainty about who and where the audiences are these days, or about how to activate the audience, or how to figure out a way to bring back some kind of windowing or some combination of all of these. But I think it’s more of an existential crisis of the distributors rather than the investors, because the investors are going to follow to where the distributors are going.”

Because too many stories “that strive for impact have struggled to connect with broader audiences,” says Strachan, Cinereach is now looking to audience research and social scientists “to better understand what keeps problems from being solved” and to “reverse engineer how to create stories in a way that makes them resonate more with broader audiences.” She explains, “We want to figure out how to ‘hide the vegetables’”—a reference to the “eat your broccoli” message films that Participant was known for—“and reimagine stories.” For example, Cinereach’s first project out of the gate this year was “Just Play: A Game Jam for Climate Futures,” an online competition challenging video game developers to engage creatively with climate themes through gameplay mechanics and story.

While it’s still early days for Cinereach 2.0, it’s hard to see how the entity’s new path squares with the quintessential American indies it had supported in the past, whether recently financed indie cinema such as Reality, A Cop Movie and Never Rarely Sometimes Always or grant-supported films such as Seeking Mavis Beacon or Earth Mama. But that pivot is the point. According to Engelhorn, the company’s new approach will require “artists coming to terms with broadening their approach to story and craft so that the critical independent elements of the vision aren’t undermined by aspects that might be barriers to industry support,” he says, calling the plan “a kind of diplomatic approach.”

Cinereach’s Strachan says the philanthropic and investment communities are interested in its new plans because, as she explains, “‘Impact’ has become a dirty word when you define it in specific terms. It’s hard to see it with one independent film, so folks who have funded media historically are looking for better ways to make it sustainable rather than one-off ideas.”

To put it more bluntly, George Rush, an entertainment attorney and indie producer of Sasquatch Sunset and Cinereach-supported Marcel the Shell with Shoes On, believes capital from high-net-worth people is going to “dry up except for the most committed philanthropists.” He says “The indie financier crowd has lost hope that there is any way to make money even on the most well-received film.”

Such a major shift has sent equity- and philanthropically funded production companies scrambling for new models. Level Forward, the indie company co-founded by producer, activist and multimillionaire Abigail Disney on similar principles of “cultural change” and “social impact” as Participant, is sustaining itself through a highly diversified approach, according to CEO and co-founder Adrienne Becker. “We need to be as good at business as we are at connecting stories to social action,” she says. To achieve that, Becker says they need to consider more “hybridized financing, which mitigates the risk across a variety of stakeholders. And we have to think about diversifying our revenue. Philanthropy is a critical piece of the puzzle, but we need equity and government support, which is why you see so many productions going abroad.” 

None of this is new, of course—indie production companies have typically added multiple other services to their suite of activities, and producers have been seeking foreign and domestic tax incentives for decades. But now more than ever, it’s essential to hedge one’s bets.

Tango Entertainment’s co-founder Lia Buman admits “There are several movies that we’re doing with multiple financiers to spread the risk, and I don’t know if we would have split a sub-$5-million-dollar movie with more than two financiers prior.”

Like a lot of indie companies, Tango, the producer and co-financier of Never Rarely Sometimes Always and Aftersun, is shifting to more commercial films and more genre movies, according to Buman, backing new projects such as Together, billed as a “co-dependency horror film” starring Dave Franco and Alison Brie, along with Picturestart and 30West, shooting in Australia, and Wicker, a “twisted romance” starring Dev Patel and Olivia Colman, along with Topic.

According to another Cinereach Producer Award grantee—Jay Van Hoy, producer of The Witch and Cinereach-backed films Mother of George and Here—the problem with film financiers more generally today is they “got accustomed to a model that was so heavily collateralized, but now there just hasn’t been a way to de-risk these films, so it puts more pressure on the marketing of the films.”

But Van Hoy, along with a vocal minority, says he see opportunities among the “confluence of problems.” With increasingly new technologies for production and distribution, the appearance of new financiers (who may take some time to cultivate), and the reduction in cost to release movies theatrically, such as P&A expenses, Van Hoy hasn’t given up on independent cinema and its ability to make an impact. “I don’t think it’s possible to have impact without great storytellers,” he says.

Level Forward’s Becker is also keeping the faith. “This word, impact, has been commoditized, but in fact, impacting a human being is a powerful thing. We’ve turned it into this noun rather than an action or a process, but it doesn’t just happen,” she says. “As Participant illustrated and we believe, it is a dual value equation.” If Participant ultimately couldn’t balance financial stability with social impact, Becker says they don’t really have an option to choose between one or the other. “We don’t have the luxury of being solely focused on the pursuit of profit,” she says. “We must be more accountable in this day and age.”

Cinereach’s Engelhorn also shares that cautious optimism and those ideals, even if the fundamental model may have changed at his company. “I hope that more and more funders not traditionally interested in supporting films see the potential of this work if we can align on the foundation from which this work emerges,” he says. “We can’t predict the future, but we can align on the conditions—culturally and otherwise—that are highly likely to create a better state for our planet and strengthen the interdependence that binds us together in our humanity.”