The following information has been reposted for your viewing pleasure from the S.O.K forum. Enjoy...
-Allies are more like friends of yours (In one narrow field) in all the vagueness that goes with that. The XP you spend on gaining an Ally dictate just how 'useful' this Ally is. Let's say, you have Allies 1 (Police). You would know a very low ranking member of the police force and could use them to do something like get yourself out of a parking ticket. If you had Allies 5 (Police) {which is the most you can have} you would be chummy with the chief of police, who might actually go as far as to tamper with evidence in a case for you, or call off a search of your property. THE PROBLEM with Allies, is that like your friends, you occasionally need to do something in return for them. Now, just like with their use that goes up in Dots, so do their demands. Your one dot meter maid police ally may ask something as mundane as 'can you pick my kids up from hockey practice' but your chief of police buddy might ask you to take care of the body of a dead hooker after she 'fell down the stairs and into a knife several times'. Of course, the easiest way to get someone to do something for you (for all of you without dominate) is to hand them off some money to them. a 5 dot resource tag goes a long way brah.
-Contacts are very narrow Allies, that instead of doing a task at your behest, will provide information for you from whatever field they are in.
-Annoying Player trying to save XP: "But can't you just ask an Ally to get you information?"
Why yes you can annoying player! however, unlike an Ally, you don't have to be all buddy-buddy with a Contact. A Contact will provide you with the information you seek, without asking you for a favor in return most of the time. Contacts are also not as heavily linked to you as an Ally. Where there might be a picture of you with the chief of Police golfing together, that police lab assistant you know in the C.S.I unit, will not out you to anyone.
As a side note, You can combo Allies with Contacts for better results! As you can only buy a merit up to it's 5th dot, if you've say bought out your Allies in the police station, but still want an edge over anyone else with a 5 dot police ally, you can start buying up your contacts as well. And don't even get me started on Status! Collect all three and see the fun really start. Frank Mason went from a Mafia hit man, to a hero cop with XP and proper role play!