What is a Slush Fund?

A slush fund refers to a sum of money reserved for specific purposes in a business. Often times, slush funds are sum of money not accounted for, these funds are kept as a reserve and used for personal gains and illicit or illegitimate purposes. slush funds occur in business and political organizations. When giving account, businesses account for slush funds in the general ledger, these funds do not have any designated purpose and are reported as commingled funds. Slush funds are often separated from funds used for legitimate purposes.

How Does a Slush Fund Work?

A slush fund is otherwise called a black fund, it is a type of fund not properly accounted for but hidden in a reserve for specific purposes. In the political sphere, slush funds are used for illegal purposes such as bribery and other corrupt agenda. Slush funds are used to influence people to gratify their political ambitions, these funds can also be used to acquire sensitive materials, sponsor people for vacations, donations for charity and others. Businesses also make use of slush funds to settle non-official bills such as paying for parties and entertaining workers. Purchase of cars for the executives of a company, employees bonuses and benefits, gifts, workers lunches and outings are also doe with slush funds. However, it is easy to siphon money through slush funds, because these funds are unaccounted for. There are cases where executives siphon money meant for pension or do fake charities to make personal gains.