Why would the police keep the money? It doesn't get to keep other confiscated money, does it? Wouldn't the state be the "default" recipient?
https://www.vox.com/2015/7/8/8909133/civil-forfeiture-states...
https://www.propublica.org/article/police-say-seizing-proper...
That really depends on the jurisdiction. Many police departments in the US self fund via confiscations, sometimes even not as a penalty for breaking the law. In a big city, that's a small part of the budget. In some more rural counties, it can be a surprisingly large amount of the budget.
See "civil asset forfeiture"