The State Department's Office of Inspector General is investigating how a now-defunct Gaza aid organization spent $30 million in taxpayer-funded emergency assistance, raising questions about government oversight of humanitarian grants and the cost-effectiveness of aid distribution in conflict zones.
The Gaza Humanitarian Foundation, which received the substantial grant announced last June and was backed by both the United States and Israel to distribute aid in Gaza, is now under federal scrutiny for its spending practices, according to a Financial Times report citing three people familiar with the inquiry. Reuters could not immediately independently verify the report.
Scope of the Investigation
The investigation aims to determine "what money was spent and how," including "which bucket it came from, and how it was doled out," one source told the Financial Times. Federal investigators are examining GHF's aid pricing and other services purchased with funds received from the State Department, the report said.
The Office of Inspector General told the Financial Times that it "does not comment on investigative matters and neither confirms nor denies the existence of an investigation," but noted a February audit of the department's "efforts to provide food assistance to the West Bank and Gaza."
Pricing Concerns
Two people familiar with GHF's operations said the organization used State Department funding to purchase food and logistics, while another person said GHF had paid "significantly more for food than the US had previously paid in the region." These concerns about inflated costs highlight potential inefficiencies in how taxpayer dollars were deployed in the humanitarian effort.
A GHF spokesperson, who asked not to be named, said the organization was not aware of the OIG inquiry and that food had been purchased "at reasonable prices." The spokesperson said internal GHF documents noted that transport costs had been particularly high due to the nature of the ongoing war. The spokesperson also said GHF was "in the process of developing a plan to reduce transport costs when [Israel's government asked it to suspend operations] in October because of the US-brokered ceasefire," declining to further comment on the organization's finances.
Congressional Scrutiny
The State Department had drawn from its humanitarian assistance funds for the $30 million grant given to GHF, according to one US official, while urging other countries to provide additional funding for the aid group. In July 2025, several senators asked Secretary of State Marco Rubio to explain why such a large grant was given, what other rules were waived and what GHF's other funding sources were.
"There should be no American taxpayer dollars contributing to this scheme," the senators wrote in a letter to Rubio, expressing fundamental concerns about accountability in foreign aid spending.
Why This Matters:
This investigation underscores critical questions about government oversight of emergency humanitarian spending and the effectiveness of taxpayer-funded foreign aid programs. The fact that GHF allegedly paid significantly more for food than previous US operations in the region raises concerns about fiscal responsibility and proper vetting of grant recipients. With $30 million in public funds at stake, the probe will test whether adequate safeguards exist to prevent waste in crisis situations where normal procurement rules may be relaxed. The congressional demand for answers reflects broader skepticism about large-scale government spending programs that lack transparent accountability mechanisms, particularly when operations are suspended before cost-reduction plans can be implemented.