Fund economics

GP commitment

Also called GP commit, sponsor commitment, skin in the game.

Definition

GP commitment is the capital the general partner and its principals commit to their own fund, called alongside limited partner capital and sharing in the same investments, usually without management fee or carried interest charged on it, which limited partners read as evidence that the manager's own money is at risk with theirs.

Updated October 9, 2026Checked against our editorial standards

Example

A $100M fund has a GP commitment of 2%, or $2M. Every capital call of 10% draws $200,000 from the GP entity along with $9.8M from the LPs. The GP's capital account records the same contributions, allocations and distributions as any LP's, but no management fee is charged on it and no carry is allocated away from it. Over a five-year investment period the principals fund the $2M in cash from their own resources, or part of it through a management fee waiver where the LPA allows one.

Confused with

Carried interest. Carry is a share of profit the GP earns for managing the fund. The GP commitment is capital the GP puts in and can lose.

Management fee waiver. One way of funding the GP commitment, where the manager forgoes fee in lieu of cash. It is a funding mechanism, not the commitment itself, and its tax treatment is a separate question.

In practice

The size is set in the LPA as a percentage of total commitments. LPs commonly ask how it is funded, whether it is borrowed, and how much comes from the individuals who make the investment decisions rather than the management company. The GP's capital account is shown separately in the financial statements so that LPs can see the commitment has actually been called.

Related terms

Capital callA capital call, also called a drawdown, is a notice from the general partner requiring each limited partner to wire a portion of their committed capital to the fund by a due date, usually ten business days, to fund investments, fees or expenses.
Management fee offsetManagement fee offset is the mechanism in a limited partnership agreement by which fees the general partner or its affiliates receive from portfolio companies, such as transaction, monitoring, advisory or director fees, reduce the management fee charged to the fund, in whole or in part.
Capital accountA capital account is the running balance of a single partner's economic interest in a fund: contributions in, allocations of income, gains and losses, less distributions out.
Carried interestCarried interest is the general partner's share of a fund's profits, typically 20%, paid through the distribution waterfall only after limited partners have received their contributed capital and, usually, a preferred return.