Money put aside to be used to bribe or influence, especially in a political context.
The word 'slush' was coined in 17th century England as the name for half-melted snow and is first referred to in print with that meaning in Henry Best's Rural Economy in Yorkshire, 1641. Of course, that's where the name Slushies, the part-frozen flavoured drinks, came from.
A century later, there was an alternative meaning of 'slush', or 'slosh', which was the fat or grease obtained from meat boiled on board ship. That invaluable guide The Gentleman's Magazine, 1756, referred to it like this:
He used much slush (the rancid fat of pork) among his victuals.
William Thompson made it sound even less appetising in The Royal Navy-men's Advocate, 1757:
Tars whose Stomachs are not very squeamish, can bear to paddle their Fingers in stinking Slush.
Despite it not being the apex of culinary delight it was considered a perk for ships' cooks and crew and they sold the fat that they gathered from cooking meat whenever they reached port. This perquisite became known as a 'slush fund' and the term joins the numerous English phrases that first saw the light of day at sea.
The author William McNally didn't think much of the practice and included a description of it in Evils & Abuses in Naval & Merchant Service, 1839:
The sailors in the navy are allowed salt beef. From this provision, when cooked nearly all the fat boils off; this is carefully skimmed and put into empty beef or pork barrels, and sold, and the money so received is called the slush fund.
In the same year, The Army and Navy Chronicle suggested that a ship's slush fund would be a suitable source of money to buy books for the crew:
To give men the use of such books as would best suit their taste, would be to appropriate what is their own, (viz.) the slush fund for the purchase of such works.
This is the beginning of the meaning we now have for 'slush fund', i.e. money put aside to make use of when required. The use of such savings for improper uses like bribes or the purchase of influence began in the USA not long afterwards. The Congressional Record for January 1894 printed this:
[Cleveland] was not elected in 1888 because of pious John Wanamaker and his $400,000 of campaign slush funds.
Into the 20th century and we head straight for one of The Simpsons' many cultural references and back to the original meaning of 'slush fund'. In the 1998 episode Lard of the Dance, Homer and Bart instigate a scheme to make money by collecting and selling grease. They try to siphon Groundskeeper Willie's stashed vat of rancid fat from the school kitchen. A fight breaks out over what is clearly Willie's slush fund or, in 20th century cartoon parlance, his 'retirement grease'.
See other Nautical Phrases.