Unfunded Commitment
An unfunded commitment is capital already promised but not yet called, so it still counts against you before any new private investment.
By Nick Bryant, Co-Founder and CTO, SMB Investor Network
2 min read
An unfunded commitment is capital you've agreed to provide that hasn't been called yet. It's an obligation, not money you might choose to invest later.
Why unfunded commitments matter to your portfolio
The money can still sit in your account while the obligation against it is outstanding. That makes an unfunded commitment easy to miss in a review that looks only at current holdings, and missing it makes you look like you have more room for new deals than you do.
Institutional investors feel the same squeeze. In a Private Equity International survey cited by Bain & Company, 53 percent of limited partners said undrawn commitments limit their new commitments1. They are institutions, not individuals, but the mechanics are the same for you. See Bain's private equity report overview.
The question is whether your existing promises leave room for new ones. Keep them visible even when no payment is being requested. The private investment liquidity budget sets them next to your cash needs.
How an unfunded commitment is tracked
Start from the commitment in your investment records and identify how much is still undrawn. Keep any amount that's been called but not yet paid in its own line: it's already requested even though the cash hasn't left your account. Use the terms and balances in the fund documents when reconciling.
Example: you have an existing fund commitment and you're considering another private investment. The fund hasn't called all the promised capital. Record the undrawn balance as an existing obligation and the new investment as a choice under consideration, so the new deal isn't judged as if the old promise had gone away.
Then ask what happens if the fund calls capital before the distributions you're expecting arrive. You don't need to predict call timing to answer that.
Common mistakes when reviewing commitments
Leaving undrawn capital out of the record makes the total easier to add up and hides future demands on your cash. Treating your whole cash balance as free for new deals does the same from the other side.
Assuming an expected distribution cancels an obligation is another. Keep an expected receipt and an outstanding commitment separate until your records show what changed.
A quiet stretch with no calls doesn't make the commitment optional. What you still owe is set by the agreement, not by how recently the fund asked.
Related terms
A capital call requests funding against the commitment. Liquidity risk is the risk that you can't get to the money when the call comes.
Source notes
The survey figure comes from Bain & Company's Global Private Equity Report 2026 overview, citing a Private Equity International survey1. The example is our own.