Unfunded Commitment
Unfunded commitment is the remaining callable amount of an LP’s total commitment that has not yet been paid in.
Allocator relevance: High — the core input to liquidity planning and pacing models, and a common source of operational stress in multi-fund portfolios.
Expanded Definition
Unfunded commitment is commonly calculated as Unfunded = Total Commitment − Paid-In Capital (PIC), with nuance depending on recycling and recall provisions. Practically, unfunded capital can be called for investments, follow-ons, fees, expenses, and reserves (depending on LPA terms and fund operations).
Allocators monitor unfunded exposure across managers and strategies to avoid over-commitment and forced asset sales during capital call spikes.
Decision Authority & Governance
Governance centers on: LPA clarity (recycling, recall, fee/expense funding), capital call forecasting discipline, administrator accuracy, and timely communication. Allocators evaluate the GP’s cash management maturity by comparing call cadence, predictability, and stated use-of-proceeds detail.
Common Misconceptions
- Unfunded only funds investments (it can fund fees/expenses).
- Unfunded is fixed (recycling/recall can change effective exposure).
- Calls always match forecasts (often they don’t).
Key Takeaways
- Unfunded is a binding liquidity obligation.
- Model recycling/recall to avoid surprises.
- Forecast accuracy is a GP operational signal.