A slush fund (also black fund), colloquially, is an auxiliary monetary account or a reserve fund. However, in the context of corrupt dealings, such as those by governments or large corporations, a slush fund can have connotations of illegality, illegitimacy, or secrecy in regard to the source of the funds or how they were acquired or for what purposes they were used. Funds may be used to discreetly pay influential people in return for preferential treatment, advance information (for example, to acquire non-public information in financial transactions) or some other service. Political dealings with slush funds tend to create suspicions of quid pro quo (buying political favors), and can be viewed on the surface as corrupt and subversive of the democratic process.
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In accounting, the term slush fund describes a general ledger account of commingled funds to which all manner of transactions can be posted, with debits and credits cancelling each other out.
Examples
Richard Nixon's "Checkers speech" of 1952 was a successful effort to dispel a scandal concerning a slush fund of campaign contributions. Years later, Nixon's presidential re-election campaign used slush funds to buy the silence of the "White House Plumbers".
In U.S. collegiate athletics, there have been multiple occurrences where boosters and supporters of a collegiate sport program provide the school and coaches with extra money. This money is then distributed to a number of athletes in order to compensate them for their participation and commitment to their program. For example, in 1986 Southern Methodist University's football team was caught receiving money from the school which was being funded by one of the boosters. In the 1990s, the University of Michigan had one booster paying several of the men's basketball players, including NBA superstar Chris Webber.
Etymology
The term slush fund was originally a nautical term: the slush was the fat or grease skimmed from the top of the cauldron when boiling salted meat. Ship officers would sell the fat to tallow makers, with the resulting proceeds kept as a slush fund for making small purchases for the ship's crew.