In short: a fund's unfunded commitment is the commitment, minus what has been called against it, plus any recallable distributions that may be called again. Summed across funds and entities, it is the amount the family has to keep available on demand. Most spreadsheets leave out the recallables, and then a call arrives that, by their own arithmetic, should not exist.
The calculation
That looks like a subtraction. There are three places where the LPA has a say:
Recallable distributions. Many funds may recall distributed capital within a set period, typically proceeds from short-held investments or capital that was over-called. The distribution notice says which part is recallable. Book the whole distribution as final and you show an unfunded figure that is too low, and the fund later calls exactly that amount.
Fees inside or outside the commitment. Some funds call management fees against the commitment, others on top of it. In the first case they reduce unfunded; in the second they do not, and they are still cash going out.
Equalisation when you join late. An investor in a later closing pays in its share of what has already been called, and often an equalisation interest on top. The interest usually does not count against the commitment.
The free unfunded commitment calculator does exactly this calculation per fund and across the book, in the browser, without any data leaving your machine.
When calls come
Unfunded tells you how much can still come. For liquidity planning, what matters is when.
- Year 0First closingFirst call, often for fees and the first investments
- Years 1 to 5Investment periodMost of the commitment is called, usually unevenly
- After thatHarvestCalls only for follow-ons, fees and expenses; distributions dominate
- At the endExtension and wind-downOften a year or two longer than planned
Three planning rules follow:
- Plan by vintage, not by fund. A fund in its second year calls differently from one in its seventh. Treat every fund's unfunded as one pot and you overstate what old funds will need and understate young ones.
- After the investment period, unfunded is usually only partly callable. What still comes is follow-ons, fees and expenses. Part of the commitment is never called. How much is in the LPA.
- A mature programme partly funds itself. Distributions from older vintages cover calls from newer ones. That holds on average, not in every quarter, and in weak exit years calls keep coming while distributions stop.
For forecasting beyond simple assumptions there are models, the best known by Takahashi and Alexander, which estimate calls and distributions from vintage, fund life and call rate. For a small family office with a handful of funds, a table by vintage with cautious assumptions is usually enough, as long as the starting number is right. And it is only right if unfunded is calculated correctly.
The most common mistake is not the forecast
It is the starting number. A forecast built on an unfunded figure that forgets recallables, assigns fees wrongly or has not been updated for two quarters is precisely wrong. The second most common mistake is the recipient: the call notice arrives by email to one person, and the deadline runs while that person is on holiday. What happens then is in missed a capital call.
How Zahlenwerk handles it
In Wealth Management by Zahlenwerk, every call and every distribution is a record on the fund position, with the notice it came from. A distribution can be marked recallable in full or in part, and the recallable part is added back to unfunded. Called, unfunded and remaining commitment follow from the records, per fund, per entity and overall.
Call notices become records with amount and due date when they are forwarded or uploaded, and upcoming calls sit on the dashboard with the days remaining, visible to everyone with access to that entity.
What it does not do today: Zahlenwerk does not forecast calls beyond the ones already announced. Planning by vintage stays yours, with a starting number you can rely on.