ILPA’s New Private Funds Guidelines: What GPs and LPs Need to Know
The ILPA’s updated reporting and performance templates aim to enhance transparency, standardization, and efficiency in private fund reporting. With implementation starting in 2026, GPs must prepare for more granular disclosures. This post explores key changes, challenges, and best practices for adopting the new ILPA standards.
Let’s all get on the same page. Let’s all speak a common language. It’s what the Institutional Limited Partners Association (ILPA) wants GPs and LPs to achieve with their recently unveiled reporting standards for private market funds. Trade associations and similar industry bodies have collectively been striving to do this in numerous business sectors. Let’s take a closer look at ILPA’s updated reporting and performance templates, including the challenges for adoption and practical advice for adapting to the new standards.
Key changes in ILPA’s 2025 reporting & performance templates
In 2024, ILPA set out to develop the next evolution of quarterly reporting standards with the launch of the Quarterly Reporting Standards Initiative (QRSI). Unquestionably, the ILPA was aiming for even more transparency when it comes to quarterly reporting of fees and expenses as well as performance and cash flows from GPs to LPs. Implementation of the new reporting templates is scheduled for Q1 of 2026, while the performance templates will happen in Q1 2027.
Key highlights of the updated ILPA Reporting Template:
- Breaking out internal chargebacks to identify expenses allocated or paid to GPs/related persons
- Adding more granular details for partnership expenses to give LPs a drill down view on some of the fees
- Creating a single, uniform level of detail for all GPs to provide greater consistency with the reporting framework identified in governing documents and accounting standards
Key highlights of the new ILPA Performance Template:
- Tables to capture cash flows and fund- and portfolio-level transaction type mapping for transparency into the calculation methodology for performance metrics
- Standardized reporting for performance metrics, including internal rate of returns (IRRs) and total value to paid-in capital (TVPI) / multiple on invested capital (MOIC), with designated breakouts for reporting the relevant gross and net figures with and without the impact of fund-level subscription facilities
- Two versions available to support GP’s varying approaches to fund-level performance calculation methodology — one version on the basis of itemized cash flows (granular method), the other on the basis of grossed up cash flows (gross up method)1
The new performance template comes with a fund-level transaction type mapping table that enables accountants, for example, to itemize capital calls for management fees, because many more granular transaction types are available within the template. This feature provides LPs with the ability to analyze two key performance metrics: net IRR and TVPI. Importantly, LPs can view these metrics in two ways: including and excluding the effects of fund-level subscription lines. This dual perspective is particularly valuable because GPs have increasingly been using these subscription lines as a strategy to accelerate capital returns to investors to potentially boost overall fund performance.
The updated reporting template addresses LPs’ concerns about expenses being passed on to them; GPs will need to now break out internal chargebacks to identify expenses allocated or paid to the GPs and related parties.2 Some of these expenses fall under the conventional definition of management fees, thereby letting LPs better comprehend the total cost of participation. The reporting template also allows predefined categories for transactions, making it easier to filter and analyze specific movements of capital. And accountants can only get that level of automation and optimization through Excel.
Why standardization matters in private market funds
Private markets and hedge fund reps often ask us how they can get cleaner, more standardized insights from torrents of data. People across an organization need to comprehend the same data, for example, coming from various fund managers, in a clear structure that makes intuitive sense. The reporting templates include clearer definitions across fields and enhanced guidance on the standardized treatment of different line items.
Moreover, ILPA removed the ability to modify the template — by both LPs and GPs.3 That standardization of the calculation of performance metrics enhances transparency. Clear definitions for metrics like TVPI and MOIC and its components will ensure consistent understanding for all parties. The era of custom PDFs for every client is likely ending.
Practical steps for GPs to transition
Nearly 7 in 10 of the QRSI participants — which included an industry wide cadre of GPs, LPs, fund administrators, compliance firms, and more — said they intend to adopt the updated ILPA Reporting Template. For the new Performance Template, the statistic was 5 out of 10.
Standardizing reporting will not be easy. Complex data flows are overwhelming disparate and rigid systems. GPs' data comes from multiple sources and entities and is often locked in silos across various systems and spreadsheets, requiring a significant revamping of data infrastructure to align with the templates' requirements. Different systems used by funds’ front, middle, and back offices often don't communicate with each other, making it quite the heavy lift to gather the granular data required by the ILPA standards.
Performance calculation might seem simple: you need the P&L, the investment, and you need the cost. However, the templates require additional information from different data stores. If a firm’s accounting system does not support this level of granularity, then they are already in a challenging spot. If a data model is not ready, adopting the standards becomes a larger undertaking. But it’s a worthwhile undertaking to provide LPs with greater transparency in a consistent format and reduce the volume of requests that GPs receive for this key information.
Transitioning to the new ILPA standards
Firms should deploy a team that brings both technical and accounting expertise to the project. The first step is to understand exactly what data the new templates will require. The firm can then assess its existing systems and data infrastructure and work toward connecting them into a centralized source of truth. Firms should carefully choose solutions that can support the configurability and various calculation approaches required by the ILPA standards.
Another hurdle to overcome may be the lack of a collective demand from the entire investor base. If LPs are content with their current reporting, GPs might not be highly incentivized to undertake the effort of adopting the new templates, even though they realize it’s the right thing to do for the long haul. There may also be GPs so accustomed to the established "need to know basis" for investor allocation, that the ROI of transitioning may not be immediately apparent. Still, GPs can reap time and money savings if they eliminate manual entry for greater data consistency and timely analysis and automate intricate allocations typically performed within spreadsheets. These efficiencies allow GPs to focus on uncovering new investment opportunities.
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The road ahead for private market fund reporting
By instituting a common language, the ILPA seeks to enable GPs and fund administrators to build automation into their systems. Templates that create a consistent framework for data collection and reporting facilitate transparency, greater efficiency, and more in-depth analysis by end-users. The entire QRSI initiative was launched last year to adhere to U.S. SEC’s Private Fund Advisers (PFA) rule, which the U.S. Fifth Circuit’s ruled to vacate in June 2024. The ILPA proceeded with the industry collaboration to create the templates based on adoption, standardization, and industry practices.
Pension funds, family offices, sovereign wealth funds, and institutional investors have become more sophisticated and want greater access to real-time data, cost breakdowns, and performance analytics. GPs can help the industry achieve a common language for comparability, up-level customer satisfaction, and unlock efficiencies in the process by adopting reporting and performance standards.
Key takeaways
1. What is the main goal of ILPA’s new reporting standards?
The new standards aim to deliver the next evolution of quarterly reporting: more uniform reporting for fees and expenses with the updated Reporting Template, and standardized return calculation methodologies with the new Performance Template.
2. When do the changes take effect?
The updated Reporting Template rolls out in Q1 2026, while the Performance Template follows in Q1 2027.
3. What are the biggest challenges for GPs in adopting the standards?
GPs face hurdles including discomfort with heightened transparency requirements, inflexible legacy technology systems, and potentially increased operational overhead to meet standards.
4. How can firms prepare for the transition?
Firms should evaluate their data infrastructure, deploy technology solutions that automate reporting, and assemble teams with both technical and accounting expertise.
5. What long-term benefits will ILPA’s new standards bring?
Standardization will lead to more efficient reporting, reduced manual effort, better data comparability, and increased investor confidence in fund performance transparency.
Sources:
1. ILPA, “How We Got Here: The Collaborative Effort Behind ILPA’s New Reporting Standards” February 3, 2025.
2. Private Funds CFO, Rob Kotecki, “ILPA aims to tackle wild west of performance metrics”, February 3, 2025.
3. ILPA, Reporting Template Guidance, January 2025.
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