US State Department watchdog probes defunct Gaza aid group over $30 million grant

The US State Department’s internal watchdog has launched a comprehensive investigation into how the now-defunct “Gaza Humanitarian Fund” (GHF) managed a multi-million-dollar emergency aid budget, according to reports.

The investigation, conducted by the State Department’s Office of Inspector General (OIG), is focusing on the details of a $30 million grant decision and the subsequent expenditure of those funds. The GHF was established last June specifically to distribute humanitarian aid in Gaza, the Financial Times reported, citing three sources familiar with the matter.

The foundation was created last year with the support of the Donald Trump administration and the Israeli government to serve as an alternative to United Nations (UN) humanitarian operations in Gaza. While the United States (US) was the only country to publicly declare its funding of the GHF, UN officials characterized the entity as a “front” utilized to further Israeli wartime objectives. International humanitarian organizations had largely refused to cooperate with the foundation.

One source stated that the OIG is investigating “exactly what the money was spent on and how,” as well as which budget line provided the funds and how they were distributed. Another source indicated that investigators are also scrutinizing the pricing mechanisms for aid supplies and logistical services purchased by the GHF using department funds.

The Office of Inspector General stated that it does not comment on ongoing investigations and would neither confirm nor deny the allegations. However, the office noted that it had initiated a general audit in February regarding the department’s “efforts to provide food assistance to the West Bank and Gaza.”Two sources with knowledge of GHF operations said the State Department transferred funds to the foundation, which then used contractors to purchase food and logistics. One source emphasized that the GHF paid “exorbitant” amounts for food supplies, significantly exceeding the prices previously paid by the US in the region.

A GHF spokesperson, speaking on condition of anonymity, claimed the foundation was unaware of the OIG investigation and defended the procurement, asserting that food supplies were largely sourced from the local market at reasonable prices. However, the spokesperson admitted that an internal assessment by the foundation found shipping costs to be exceptionally high due to the inherent risks of operating in an active war zone.

The spokesperson further noted that while the GHF was developing a plan to reduce transportation costs, the Israeli government requested the suspension of its activities in October following a US-brokered ceasefire. The spokesperson declined to provide further details regarding the foundation’s financial statements.

While US government internal audit mechanisms do not have the authority to impose direct criminal sanctions, they can recommend legal action to relevant agencies or refer cases directly to the US Department of Justice if they find reasonable suspicion that federal laws have been violated.

Established in May 2025, the GHF faced intense scrutiny from its first day of operations due to its opaque organizational structure, mysterious funding sources, and the reported use of mercenaries at aid distribution points. During a period of escalating international condemnation regarding Israel’s blockade of Gaza and its severe humanitarian toll, the foundation’s founding executive director and deputy resigned before operations had even fully commenced.

Health officials in the Hamas-controlled territory reported that approximately 1,000 Palestinians were killed by Israeli fire while attempting to reach GHF distribution centers. During the period when Israel restricted access for most international organizations except the GHF, UN agencies warned of an impending famine in the besieged enclave.

The GHF commenced operations during a period when the Trump administration was moving to dissolve the US Agency for International Development (USAID). State Department officials and contractors claim this move led to total chaos in aid distribution.

A US official stated that the department drew the $30 million grant from humanitarian aid funds and that the administration encouraged other nations to contribute to the structure. However, officials in Washington admitted they struggled to understand the exact mechanics of how the GHF operated.

Reports indicate the government exempted the GHF from the standard oversight and legal regulations typically applied to taxpayer-funded groups. Conversely, congressional staff overseeing the department’s budget were reportedly given no information regarding which security measures remained in place or how the funds were being spent.

In July, a group of Democratic senators wrote to Secretary of State Marco Rubio, questioning “what procurement mechanism was used in the execution of the $30 million appropriation,” which rules were bypassed, and what other funding sources supported the GHF. The senators stated in the letter that “not a single dollar of American taxpayers should be complicit in this questionable scheme.”

The GHF completely ceased its Gaza operations in October 2025. A US official who was forced to defend the project during its active period commented on its status, stating, “The funding was always in the dark. There were major question marks within the State Department’s Bureau of Near Eastern Affairs because there were no answers.” Diplomats reportedly felt significant unease being tasked with advocating for what they described as a half-baked and poorly executed project.

By late 2025, the GHF, which was initially registered in both the US and Switzerland, announced it had run out of funds. While the foundation claimed to have distributed more than 187 million free meals to Gazans during its months of operation, even some Israeli officials have viewed that figure with skepticism.