Cash or assets given to an entity in exchange for an equity interest or as part of an ongoing obligation, or capital commitment, to fund the entity. For example, a capital contribution is often made in exchange for additional common stock, partnership interests or limited liability company interests of an entity. Additional capital contributions may be made periodically, in accordance with a schedule established by the entity’s budget or business plan or pursuant to a particular capital call after the initial grant or issuance of the common stock or partnership or limited liability company interest.

In the context of investment funds (such as a private equity fund) where an investor (or limited partner) becomes a participant in a fund by subscribing for a capital commitment, the commitment is not funded at subscription or even all at once, but in separate capital contribution installments. The sponsor of the fund designates capital contributions by making capital calls on an as-needed basis to make investments and to pay fees and expenses over the life of the fund. The sponsor's ability to call for capital contributions from its investors is limited at any time to the extent of each investor's unfunded commitments (the investor's total commitment less contributions already made). For more on capital contributions and private equity fund formation, see Practice Note, Private Equity Fund Formation and Timeline of a Private Equity Fund.