U.S. state department watchdog investigates Gaza aid grant to Gaza Humanitarian Foundation

Traders Union
All News
Financial News
Gaza aid grant investigated

Highlights

U.S. State Department’s Office of Inspector General is investigating a $30 million June grant to Gaza Humanitarian Foundation, focusing on spending, procurement, and unusually high transport and food costs.
Gaza Humanitarian Foundation, backed by the Trump administration and Israel, became controversial after replacing the UN-led aid effort, receiving the U.S.'s sole public financial support and facing operational questions and criticism.
GHF suspended Gaza operations in October 2025 citing depleted funds after reporting 187 million meals distributed, a number disputed by Israeli officials amid ongoing political and humanitarian scrutiny.

Inquiry examines grant spending and procurement

As first reported by the Financial Times, the U.S. state department’s Office of Inspector General is investigating how the Gaza Humanitarian Foundation, or GHF, spent millions of dollars in emergency aid, according to three people familiar with the inquiry. The probe focuses on a $30 million grant announced by the department in June for the private organization, which was created to distribute aid in Gaza.

People familiar with the inquiry said investigators are examining what the money was spent on, which funding stream it came from and how it was disbursed. The inspector general is also looking at the pricing of aid and services purchased by GHF with state department funds.

The state department OIG said it does not comment on investigative matters and neither confirms nor denies the existence of an investigation, but said it initiated an audit in February of the department’s efforts to provide food assistance to the West Bank and Gaza. Two people familiar with GHF’s operations said the department transferred the money to the group, which then bought food and logistics services through contractors.

One person said GHF paid significantly more for food than the U.S. had previously paid in the region. A GHF spokesperson said they were unaware of an OIG inquiry and said food was largely procured locally at reasonable prices, while an internal review found transport costs were especially high because of the risks of operating in an active war zone.

The spokesperson said GHF was developing a plan to reduce transport costs when Israel’s government asked it to suspend operations in October because of the U.S.-brokered ceasefire. They declined to comment more broadly on the organization’s finances.

Political backlash and humanitarian concerns

GHF was set up with backing from the Trump administration and the Israeli government to replace the UN-led aid effort in Gaza. The U.S. was the only country to publicly acknowledge funding the group, while UN officials criticized it as cover for Israeli war aims and humanitarian organizations refused to work with it.

The organization drew controversy soon after its launch in May 2025 because of its opaque origins, unclear funding and use of private military contractors at aid sites. Its founding executive director and deputy both resigned before operations began, as international criticism of Israel’s blockade of Gaza mounted.

Health officials in the Hamas-controlled territory said about 1,000 Palestinians were killed by Israeli fire while trying to reach GHF centers. UN agencies also warned of famine spreading across the blockaded territory as Israel restricted access for most international groups except GHF.

GHF started operating as the Trump administration dismantled the U.S. Agency for International Development, a move that state department officials and contractors said caused chaos in aid distribution. One U.S. official said the state department used humanitarian assistance funds for the $30 million grant, and although the administration encouraged other countries to contribute, officials in Washington struggled to determine how GHF was operating.

Congressional staff overseeing the state department’s budget said they were not told which safeguards remained after the administration waived audits and other rules normally imposed on taxpayer-funded groups, or how GHF money would be spent. In July, Democratic senators asked Secretary of State Marco Rubio to explain the procurement mechanism used for the award, which rules were waived and what other funding sources supported the group.

U.S. government watchdogs cannot impose punishments, but they can recommend action or refer cases to the attorney-general when they have reasonable grounds to believe federal law has been broken. GHF suspended operations in Gaza in October 2025 and later said it had run out of money, after claiming it distributed more than 187 million free meals, a figure disputed by some Israeli officials.

Our earlier article on the Justice Department settlement creating a $1.776 billion compensation fund over the leak of Donald Trump’s tax returns outlined why the payout mechanism sparked bipartisan backlash. We noted that a politically appointed commission would have wide discretion to approve awards with limited transparency and no appeals, prompting legal challenges and broader concerns about accountability for taxpayer-funded distributions.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.