Ontario Music Fund Frequently Asked Questions

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1 175 Bloor Street East South Tower, Suite 501, Toronto, Ontario M4W 3R8 Telephone (416) Fax (416) rue Bloor est Edifice sud, bureau 501, Toronto, Ontario M4W 3R8 Téléphone (416) Télécopieur (416) Ontario Music Fund Frequently Asked Questions Overview/Recap of Ontario Music Fund Program Objectives We strongly encourage you to thoroughly review the Ontario Music Fund s program objectives and to check your application against those program objectives in order to ensure your best opportunity for a successful application. The Ontario Music Fund was created to support Ontario s music companies and organizations in expanding their economic and cultural footprints within Canada and around the world. The program is focused on job creation, and was designed to drive activity and investment. In summary, the overall program objectives of the Ontario Music Fund are to: Increase music production activity in Ontario to build strong, competitive and sustainable music companies. Strengthen Ontario s music industry by supporting institutions, organizations and initiatives that develop artists, drive revenue growth and attract audiences/increase tourism. Strategically advance Ontario s Live Music Strategy and increasing opportunities for new/emerging Canadian artists to perform in Ontario, in Canada and internationally. Create opportunities for emerging artists and music businesses in francophone, aboriginal and culturally-diverse communities and musical genres. As you are preparing your application, you should ensure to check your business plan, proposal, project activities, and anticipated results meet the objectives of the Ontario Music Fund. FAQ posted December 17, When can I expect a decision on my OMF application? For the Music Company Development, Music Futures and Live Music streams, we expect funding decisions to be communicated back to applicants by March For the Music Industry Development stream, applications are being accepted on an ongoing basis until January 31, 2014, and it is anticipated that applications within the Industry Development stream will receive a response within approximately 8 weeks from the date of submission. 1

2 FAQs posted December 10, Since FACTOR funding can be a combination of public and private sources, how will it be treated under the OMF? Under the OMF, FACTOR funding will be treated as 50% public and 50% private. This breakdown would be relevant for the purposes of allocating the appropriate amount within the Other Government Funding portion of your activity budget s financing plan. 3. How will Radio Starmaker Funding be treated under the OMF? Radio Starmaker Fund is funded by private broadcasters and as such will be treated as private funding under the OMF. 4. Are recording studios eligible to apply to the OMF? The Ontario Music Fund is intended to grow the Ontario music industry, expand the capacity and success of music entrepreneurs, and provide Ontarians and Canadians with access to more live performances and recordings by homegrown artists. The music industry is large and diverse with many artists, managers, music businesses, distributors and retailers supporting various parts of the value chain. The OMF is primarily targeted at companies which take the primary business risk behind discovering, cultivating, recording, producing and/or promoting artists. Recording studios (permanent facilities for professional recording and editing of music and sound) are not directly eligible to receive support from the OMF. These businesses offer their services, usually based at hourly rates, to a wide range of clients including artists/musicians, but also to the advertising industry (e.g., commercials) and film/tv production, among others. While they are highly valued and contribute to artist success, studios are vendors and suppliers to the music industry, and Ontario cultural media programs do not provide funds directly to industry suppliers. Studios will benefit from the increased investment by music companies that the OMF will provide. Consortiums of Ontario recording studios, however, may wish to apply to the Music Industry Development stream for support to jointly promote their services or expand staff training. 5. Are Orchestras and Choirs eligible to apply through the Live Music stream? Eligible applicants under the Live Music stream are establishments primarily engaged in the development and delivery of live music events, concerts and tours in more than one venue in Ontario. By this definition, Orchestras and Choirs are considered to be primarily performing entities and not primarily presenters of live music. If the Orchestra or Choir, however, is part of a larger arts service or training organization and the presentation of live music functions to support and advance their primary business or activity (music-related), they should review the Music Industry Development guidelines as they may eligible in that stream. OMDC Ontario Music Fund Frequently Asked Questions 2

3 Additionally, if the performing entity has had a commercial release in the last 24 months and holds and controls the majority of their copyright and intellectual property, they may be eligible to apply as Artist Entrepreneurs in Music Company Development stream. FAQs posted December 3, Does OMDC require that we submit a quote for each projected eligible expenditure? Quotes for eligible projected expenditures are required so the OMDC may better evaluate the reasonableness of the expenses being claimed. OMDC leaves the inclusion of quotes up to the judgment of the applicant where it is material to their application. While quotes for every eligible projected expense would not necessarily be required, particularly for smaller amounts, we would recommend providing quotes for eligible projected costs that are of a high value or where there is a variation in value. OMDC also reserves the right to request documentation of any costs claimed by applicants. 7. Does OMDC require that we submit proof of OMDC s inclusion on its insurance policy upon application or can we provide this information upon project approval? The copy of insurance listing OMDC as an additional insured party may be submitted to OMDC either at time of application, or upon approval for OMF funding. Important note: For applicants who are approved for funding in advance of OMDC s receipt of Copy of Insurance listing OMDC as additional insured, contracts will not be executed until such time as proof of OMDC s inclusion as an additional insured on your company s Commercial General Liability Insurance policy is provided.) 8. How should we calculate the appropriate allocation of office space if we are claiming a portion of office space as an eligible expenditure towards the allowable administration? OMDC leaves this up to the applicant s judgment of what is a reasonable allocation of office space that is used directly in the delivery of the planned activities, and how best to articulate this, however, a square footage allocation of the applicant s overall office space may be a clearer way of demonstrating the expenditure as it relates to the activity. 9. Can you please define what you mean by a Company budget under section 3 of Supporting Documents and Copy of organization s business plan under section 4 of Supporting Documents in the online application? The OMDC does not have prescribed definitions for company budget or organization business plan as we would like to provide as much flexibility as possible to companies by allowing them the opportunity to provide information in their preferred format. These documents, however, should provide a clear basis for the OMDC to assess the eligibility of the company, the feasibility of the activities as they pertain to the goals and objectives of the Ontario Music Fund, and how the activities relate to the company budget and business plan. As mentioned on page 9 of the Music Company Development guidelines, a company business plan should contain the total projected revenues, expenditures and profits for the Applicant, and include forward-looking information on plans for company growth, supported by a discussion of competitive strengths, artist development strategies, human resources, OMDC Ontario Music Fund Frequently Asked Questions 3

4 corporate financing and other key details. This strategic planning document should outline the organization s business objectives over a recommended 18-month period so the OMDC can better evaluate planned activities and assess how OMF funding will help achieve them. We trust that applicants will use their best judgment in presenting existing financial and business planning frameworks in an attempt to demonstrate why the organization is a strong candidate for funding per the objectives of the program. FAQs originally posted November 22, Am I able to meet with someone to review my application? The OMDC is not able to review applications before they are submitted. Potential applicants may questions to the OMF account but please keep in mind that due to the heavy volume of inquiries, we may not be able to respond to you directly. All applicants should thoroughly review the OMF overview and applicable guidelines, in addition to the presentations from our information sessions/webinars which are all available at We are also updating our FAQs regularly based on queries from the info sessions/webinars and from the OMF account, so please check the website regularly as you may find the answer to your question in this document. 11. How much of the annual $15 million is allocated to each stream? Given that this is the first year of the program, we are allowing for some flexibility until we are able to determine the volume and quality of applications that will come into each stream. Having said that, the OMDC has considered notional targets of what percentage of the budget will go to each stream. We are committed to ensuring the success of all four streams of the program, and we will take care to ensure a fair distribution of funds across all streams. 12. What is the anticipated turnaround time for decisions? Depending on the volume of applications received, we anticipate a late-february/march decision time frame. All funding commitments for year 1 of the OMF will be announced before the end of the fiscal year (by March 31, 2014). For the Industry Development stream, which has a rolling intake, the estimated time frame for decisions is approximately eight (8) weeks from the date of receipt of a complete application. The deadline for the Industry Development stream is January 31, 2014, however, you can submit your application any time up until that date. 13. What is the maximum percentage of funding allowed from the Ontario Music Fund in the Music Futures stream? For the Music Futures stream, the applicant is required to contribute a minimum of 25% of the total project cost from non-government sources. The OMF could conceivably fund the remaining portion of the budget, however, other government funding supporting the project would be applied to the remaining 75% of the budget (after the applicant s 25% contribution). OMDC Ontario Music Fund Frequently Asked Questions 4

5 Of the applicant s required minimum 25% contribution portion of the budget, up to 60% (which is the equivalent of 15% of the overall project budget) may be in the form of in-kind costs provided that these are reasonably valued. For example, if the applicant s total project cost is $10,000, the applicant is required to provide a minimum of $2,500 in funding towards the project. Using this example, up to $1,500 of the applicant s $2,500 contribution may be in the form of in-kind costs, as long as these are reasonably valued. While including the maximum amount of allowable in-kind contribution value in the activities budget is perfectly legitimate, please do keep in mind that this is a competitive process, and your application will be assessed against those companies that are contributing a higher percentage of cash, and such applications may be assessed more favourably than those with a higher amount of in-kind contribution. Regardless for the project size, the maximum dollar amount that OMF can contribute to a project in the Music Futures stream is $50, Are Arts and/or Community festivals that have a music component eligible? Music must be the primary activity of the applicant festival or series. In order to be eligible for the fund, a festival must fit the criteria as outlined below (please see page 4 of the Live Music stream guidelines): New music festivals or similar events at which music is the primary activity, and which are in their first or second year of operation; Ongoing festivals or music series which significantly expanding the number of days, number of performances or number of acts on their bills. 15. Do Management Companies and Artist Entrepreneurs need to be incorporated? Under the Music Company stream, eligibility requirements state the applicant/company applying must be incorporated in Canada or be in the process of incorporating and be based in Ontario, meaning the company must be registered in Ontario and have a permanent office in Ontario. It also states the applicant must be in operation for at least two years prior to application. In the Music Futures stream, while incorporation is encouraged, exceptions may be made in the case of applicants who demonstrate strong potential for success. At a minimum, an applicant must be a registered business in Ontario with a corresponding Business Identification Number. 16. If a company has just incorporated but is resident in Ontario and can prove that it has been active in music for more than the two years as stated in the guidelines, will that be acceptable? Companies with less than two years of operation may be considered eligible if they are managed/controlled by individuals with at least three years of experience in a senior role in the music industry (please refer to the Ontario Music Fund Overview document). OMDC Ontario Music Fund Frequently Asked Questions 5

6 17. What is the definition of a permanent establishment in Ontario? A permanent establishment generally refers to a fixed place of business. However, whether a fixed place of business is a permanent establishment is a question of fact which must be determined on a case-by-case basis. In interpreting the term permanent establishment, the courts have considered factors such as: the degree of the corporation s control over the place of business, the degree of continuity and permanence of the place of business and the presence of personnel and routine activities. 18. What type of financial statements am I required to submit with my application? Corporate financial statements must be submitted as part of an application to the Music Company Development, Music Industry Development, and Live Music streams of the OMF. OMDC prefers reviewed or audited financial statements. However, OMDC will accept the following: Applicant organizations with annual revenues less than $1 Million: Notice-to-Reader Financial Statements prepared by an independent professional accountant (CA, CGA, CMA). Financial Statements accompanied by a Review Engagement Report (with the review engagement performed by an independent professional accountant (CA, CGA, CMA). Applicant organizations with annual revenues greater than $1 Million: Financial Statements accompanied by a Review Engagement Report (with the review performed by an independent professional accountant (CA, CGA, CMA). Financial Statements accompanied by an Auditor s Report (with the audit performed by an independent professional accountant (CA, CGA, CMA). For the Music Futures stream, financial statements for the last two years of completed operations are required. Statements prepared by an external accountant or auditor are preferred if these exist. 19. How do I calculate Net Revenues for the purpose of assessing my eligibility? Net revenue is defined as gross sales reduced by customer discounts, returns, freight out, and allowances. 20. What is the definition of a Canadian-controlled corporation? A Canadian-controlled corporation is generally a corporation that is more than 50% owned by Canadians, as determined under sections 26 to 28 of the Investment Canada Act (Canada). 21. Can I include the cost of capital expenditures (purchase of equipment, software, etc.) in my activities budget? As outlined in the various Ontario Music Fund Guidelines (Music Company Development, Music Industry Development, Live Music, Music Futures), costs related to capital expenditures (equipment, software) are restricted to specific circumstances. OMDC Ontario Music Fund Frequently Asked Questions 6

7 In the circumstances where costs related to capital expenditures are permitted to be included in the activities budget, an applicant can only include the amortization expense related to the cost of the capital expenditure. Where a capital asset has been rented, the actual rental cost is permitted for inclusion. The amortization expense for each capital expenditure must be calculated using the prescribed amortization method outlined in each program stream guideline (i.e. straight-line method, % of cost). See the applicable guidelines to determine the maximum amount of amortization expense that is eligible to be included in the activities budget. 22. The guidelines state that alcoholic beverages are not an eligible expense. Are accommodation, travel and food eligible? Yes, those costs are eligible when they relate to a specific eligible activity, and if a sound business reason can be provided as to why those costs would be incurred as part of the project. 23. Is my company eligible to submit an application for two different streams? The OMDC encourages companies to make one application to the stream that best fits the company in terms of its primary activities. However, if you have reviewed the eligibility criteria carefully and feel your company fits the eligibility criteria for two streams, technically it could be possible to apply to both. Please consult with OMF staff if you are planning to submit more than one application. You may not apply for the same eligible activities/costs under both streams. Also keep in mind that the company s total ask (both streams combined) cannot exceed the maximum OMF contribution of the stream with the highest cap. For example if a company applied to Music Company Development and Live Music, the maximum the company could receive would be $1.5 million. Also keep in mind that each application would be reviewed independently and comparatively/competitively in the context of all other applications received. The approval of one application would not in any way guarantee the approval for the second. 24. Can the expenses listed in the activities budget and cost report include sales taxes? Taxes that are recoverable by the Applicant may not be included in the Activities Budget or claimed as an Eligible Cost in the final cost report. 25. My company includes two ongoing businesses (a record label and a recording studio). Can I combine the earned revenue from both businesses to qualify to the Music Company or Music Futures program? Each program stream has specific requirements set out for each applicant class (Eligible Applicant) as well as what will be considered as Eligible Revenue to qualify. Revenues earned outside of the primary activity of the Eligible Applicant definition will not be considered. OMDC Ontario Music Fund Frequently Asked Questions 7

8 FAQs originally posted November 4, What is the definition of a "Canadian" artist? A Canadian Artist must be a Canadian citizen or have landed immigrant status. 27. What are the criteria that a company needs to meet in order to be an Ontario-based music company? To be considered Ontario-based, the company must be registered in Ontario and have a permanent office in Ontario. 28. What is the time frame used to calculate eligible revenues? What kind of documentation is required? The applicant should provide the last two complete years for which audited financial documents are available. 29. I have an upcoming project that does not fall within the prescribed timelines. When will the application for the second year of the OMF be open? Program timelines/application deadlines for the second and third years of the fund have not yet been announced, however we anticipate being able to provide that information within the coming weeks. 30. Is a company's eligibility based on its revenues? Shouldn t eligible funding depend on the investment a company is making? The revenue threshold is part of the criteria used to determine a company s eligibility for this stream. Other criteria include: track record in the industry core business activities (recording, marketing and selling sound recordings and artist development) existing distribution for the Canadian market holds the master copyright, or licence for a minimum of four Canadian-artist releases or four Canadian releases defined by CRTC Canadian content regulations Company activity and business plans will also be evaluated for their viability and adherence to program objectives (see page 1 of Music Company Development guidelines to determine eligibility). 31. Would an independent concert series be eligible? Depending on the size of the business and type (i.e. annual revenues, presenter or promoter), a concert series could be eligible under either the Live Music (must be a new or expanded activity) or Music Futures stream (must demonstrate how OMF funding will contribute to growth and long-term potential of company or initiative). All artists must be remunerated for their performances. guidelines for more details. Please review these specific OMDC Ontario Music Fund Frequently Asked Questions 8

9 32. The Music Company Development guidelines state that minimum revenue requirement is $100,000. Isn t the fund supposed to be bridging the gap for new companies that don't yet have the revenues in order to seek and obtain proper investment? Is there funding available for smaller music companies? Newer/emerging music companies with revenues of between $35,000 and $100,000 may be eligible for funding through the Music Futures stream of the OMF. This stream is intended to increase the business capacity of small music companies with strong potential, support Ontario s musical diversity, and support and strengthen production of music from underrepresented but high potential genres. 33. Funding through the OMF is available to independent labels. Is there any funding available for independent artists? Under the Music Company and Music Futures streams, independent artists that meet the criteria for artist entrepreneurs could be eligible for funding from the OMF. Please see the specific guidelines for the Music Company and Music Futures streams for more details on eligibility requirements. 34. Is the fund open to all genres of music? The OMF is aimed at strengthening and stimulating growth in Ontario s music companies and supporting the sector as a whole. The Fund is designed to drive activity and investment to support Ontario s music companies and organizations in expanding their economic and cultural footprints within Canada and around the world. It is open to all genres of music. The Music Futures stream is intended to strengthen Ontario s production of music from under-represented but high potential genres. OMDC Ontario Music Fund Frequently Asked Questions 9

10 Ontario Media Development Corporation An agency of the Ontario Ministry of Tourism, Culture and Sport, OMDC facilitates economic development opportunities for Ontario s cultural media industries including book and magazine publishing, film and television, music and interactive digital media industries. To receive further information on OMDC music programs please contact the Program Coordinator, Ontario Music Office: 175 Bloor Street East, South Tower, Suite 501 Toronto, Ontario M4W 3R8 T: F: OMDC Ontario Music Fund Frequently Asked Questions 10

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