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Should Filmmakers Be Financially Accountable to their Kickstarter Supporters?

A recent NPR story, “When a Kickstarter Campaign Fails, Does Anyone Get Their Money Back?”, raised the issue of failed crowdfunding campaigns and financial restitution to supporters. It’s a relevant topic as Kickstarter is increasingly acting as a pre-sale, customer-financing platform for sundry consumer, tech, and design goods. iPod wristwatches, RAW-shooting cameras, tripods and remotes, aquariums — many projects, some from creators with manufacturing backgrounds and some without, are bypassing the angel investor round and raising start-up capital directly from their customers. And while these are creative projects, they’re different from the short films and features we highlight on our curated Kickstarter page. Folks donating to these projects are pre-buying the product itself and will be justifiably angry if it doesn’t arrive. As for a film… well, it’s hard to put a timeline on art. Some projects happen and some don’t. Maybe that $25 you sent to a filmmaker for a project that failed somehow supported his or her creative development and will manifest in an even better project down the line?

Or, at least that’s the way I figured it. A new blog post by Kickstarter honchos Perry Chen, Yancey Strickler and Charles Adler, “Accountability on Kickstarter,” suggests otherwise. The post responds to the NPR article by detailing whose responsibility it is when projects fail. Mostly, the Kickstarter founders write, it’s up to backers to vet projects. And because Kickstarter doesn’t hold the money, it can’t offer refunds. That much I knew. What I didn’t know was this:

Is a creator legally obligated to fulfill the promises of their project?

Yes. Kickstarter’s Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) We crafted these terms to create a legal requirement for creators to follow through on their projects, and to give backers a recourse if they don’t. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill.

Interestingly, the creator’s legal responsibility to his or her backers concerns the rewards, not the project itself. A failed project for which the creator sent out all the rewards couldn’t prompt a legal challenge from a backer. But a project whose rewards were tied to the production itself, a project that didn’t send that DVD of the finished film, or the signed Polaroid from the first day of shooting, or the private screening for the $5,000 backer — that project could place its creator in legal jeopardy.

The lesson here for filmmakers: when crafting a Kickstarter campaign, carefully consider your rewards, and make sure you’re making promises you can keep.

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