What is a Slush Fund
A slush fund is a sum of money set aside as a reserve. In businesses, political parties and other organizations, the term is used to describe money that has been set aside as a rainy day fund, or for illicit purposes or personal gain. In accounting terms, a slush fund describes a general ledger account of commingled funds which does not have a designated purpose.
BREAKING DOWN Slush Fund
Slush funds are commonly used to bribe or influence people in return for preferential treatment, or to acquire non-public information or other services.
In politics, slush funds have been used to hide illegal campaign contributions, or fund high flying lifestyles. They can also be used, quite legally, to fund contributions and influence people, by paying for extravagant travel and expensive fundraising dinners and golf events. In the United States, political action committees often entertain lavishly.
In business, slush funds are commonly used quite legitimately to pay for parties and other entertainment. Or the slush fund might be used for corporate perks, such as executive cars or employee bonuses, gifts, outings and staff lunches. Businesses have also been known to use slush funds to bribe labor representatives, siphon money from pension funds or hide profits (so they can be used to flatter returns later on). Such slush funds are not properly accounted for, or kept off the books. There are also countless examples of fake charities that have been turned into personal slush funds, where charity dollars can be wasted on salaries, bonuses and luxury vacations, if not outright fraud.