In its non-political sense, soft money is a term for grant money, a means of
support used by those in academia who are not paid by their host institutions
to teach. Often, it is used as a disparaging term by those unable to obtain
tenure, since the "soft" implies the funding is unsure or otherwise
temporary, thus raising the possibility of losing financial support. Many
of those pursuing academic careers are forced to rely on soft money early on in
their careers while searching for tenured positions.
While some people can and do make their careers work using only
soft money (perhaps supplemented by the occasional semester of teaching),
the failure of many to obtain tenured or tenure-track positions often drives
people from academia. While the lack of "job security" provided by soft money positions isn't much different from
jobs in the private sector, the salary levels of academic positions are
much lower. Academic salaries are generally two-thirds or less of those in the
private sector, so many soft money people naturally move to the private sector after
unsuccessful academic job searches. The opportunity cost of remaining on soft money can be very high unless the fulfillment of working in academia outweighs the higher financial reward of working in the private sector.
The soft money system is open to abuse by colleges and universities. Some
academic departments will encourage young academics to remain in departments
by offering them one or two classes of teaching per year. These individuals
remain in hopes of perhaps being offered tenure or other long-term
appointments, but this is not the norm. This allows academic departments to
have "cheap labor" -- teachers to teach classes without having more tenured
staff (and their accompanying benefits) on board. University
departments also host people who willingly spend most of their time on research rather than education, either for the prestige of having publications with the department's name attached, or for the financial benefits of administrative overhead that their soft money brings in.
However, it does allow some people the flexibility to pursue their own
interests in the (very) relaxed academic environment without having to take on the responsibilities of tenure. Though tenure is often portrayed as a sinecure, it does have many responsibilities attached, such as
teaching several classes per year, participating in the academic
administration of their host departments, and maintaining a number of student
advisees or research assistants. However, one could argue that the whole point of
being in academia is working with and teaching students, and that academics remaining purely on soft money also abuse the system. Furthermore, tenure isn't a perfect system for academia either -- it is open to abuse by academics tired of or unfit for their positions as well.
In the basic sciences, most soft money
comes from government institutions such as the National Science Foundation
or NASA in the United States. Those in other
fields may obtain much of their soft money funding from private sources such
as chemical or pharmaceutical companies or private research foundations. Some
prizes and awards could also be considered "soft money", such as
MacArthur Foundation Grants. Soft money
is not limited to the sciences; soft money sources (like the National Endowment for the Arts in the US) exist in the liberal arts as well.
In a message, Anark noted that research universities often make a proven track record of obtaining soft money either an official or unofficial prerequisite for tenure or tenure-track positions. This is motivated both by a desire to see that the tenure candidate is able to support research students and themselves during summer months or during sabbaticals, as well as to bring overhead into the department. "Overhead" can actually be a huge percentage of the net value of a grant -- some schools charge overhead rates of over 60 percent. Thus soft money can be very lucrative for host universities. Making it a requirement for tenure assures a steady inflow of this revenue source.