The inquiry by the State Department’s Office of Inspector General is focused on a $30 million grant awarded to the foundation in June 2025, the Financial Times reported.

The Gaza Humanitarian Foundation was created as an alternative aid distribution mechanism that largely bypassed United Nations-led humanitarian operations in the territory during the Gaza conflict.

According to the report, investigators are examining how the funding was sourced and spent, including procurement practices for food supplies and transportation services provided through private contractors.

Sources familiar with the matter told the Financial Times that the foundation paid significantly higher prices for food than previous U.S.-funded humanitarian programs in the region.

A spokesperson for the foundation denied knowledge of any investigation and defended the organization’s purchasing practices, saying most food was procured locally at reasonable prices. The spokesperson acknowledged, however, that transportation costs were unusually high because of the operational risks associated with active conflict zones.

The State Department’s Office of Inspector General declined to confirm or deny the existence of a formal investigation but said it had launched an audit earlier this year into U.S. food assistance efforts in Gaza and the occupied West Bank.

The foundation faced criticism soon after its launch in May 2025 over its opaque financing structure and its reliance on private military contractors at aid distribution sites.

Its executive director and deputy director resigned before operations officially began as international criticism mounted over Israel’s blockade of Gaza and worsening humanitarian conditions in the enclave.

The report said Gaza health authorities estimated that around 1,000 Palestinians were killed by Israeli fire while attempting to access aid near distribution centers operated by the foundation, while United Nations agencies warned that famine conditions were spreading across the territory.

According to the Financial Times, some U.S. officials privately questioned how the foundation operated after the Trump administration waived several audit and oversight requirements typically imposed on federally funded humanitarian organizations.

Democratic lawmakers also requested explanations from U.S. Secretary of State Marco Rubio regarding the approval process for the funding and the safeguards attached to the aid program.

The organization suspended operations in October 2025, citing funding shortages, despite claiming it had distributed more than 187 million meals in Gaza, a figure reportedly disputed by some Israeli officials.