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The money is given to the prize winners in each category. In Alfred Nobel's Will, he stated that his money, all nine million of it, would be invested into a steady fund and the interest would be given out for the prize. Nowadays, donations are added to the prize money. When there is no prize given the money is allocated back into the main fund.
Since 1901 when the prize money was 150,000 the amount has increased by 6667% to today's amount of 10 million. Most of the money given to the prize winners usually is used to pay back loans for the research. With research today the cost of paying back loans for all the research could cost much more than 10 million.
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