Gaza relief efforts at risk as pledged USAID funds remain undelivered
JERUSALEM (AP) — The Trump administration’s decision to suspend USAID funds has disrupted hundreds of millions of dollars in aid contracts, forcing humanitarian organizations to front their own resources to maintain a delicate ceasefire, according to U.S. aid officials.
The funding freeze puts at risk the incremental progress made by relief groups in easing Gaza’s humanitarian emergency during the ongoing Israel-Hamas truce. It may also jeopardize the ceasefire itself, which was brokered with U.S. involvement.
USAID had allocated over $383 million for aid in Gaza as part of the truce roadmap, with approval granted on Jan. 31, say three aid officials familiar with the process.
However, no partner organizations have reportedly received payments since, the officials said, speaking anonymously due to fear of professional retaliation after enduring multiple furlough waves.
Two leaders from prominent aid organizations confirmed that promised funding has yet to arrive, despite having already invested millions in goods and services. They acknowledged they cannot keep operations running indefinitely under current financial strain.
Trucks are seen waiting at the Egyptian side of the Rafah crossing into Gaza on Sunday, March 2, 2025. (AP Photo/Mohamed Arafat)
Trucks are seen waiting at the Egyptian side of the Rafah crossing into Gaza on Sunday, March 2, 2025. (AP Photo/Mohamed Arafat)
• Copy Link copied
Link copied
• X
According to internal USAID documentation reviewed by the AP, several NGOs have reduced staffing and curtailed activities due to the funding blackout.
This rollback could disrupt the truce, under which Hamas was to release hostages in return for prisoner exchanges and expanded aid deliveries into Gaza.
“The U.S. laid out firm obligations for aid distribution as part of the ceasefire, and it’s impossible to meet those while the funding remains frozen,” said Jeremy Konyndyk, head of Refugees International and a former USAID staffer.
USAID has become a central target in efforts by President Donald Trump’s administration and the Department of Government Efficiency—led by Elon Musk—to reduce federal spending and shrink government size.
NGOs Forced to Reduce Relief Projects as USAID Funds Remain on Hold
Prior to President Trump’s term, USAID had roughly $446 million budgeted for Gaza support in 2025, according to aid agency insiders.
After a freeze on international aid disbursements, USAID submitted a waiver to proceed with Gaza funds. Authorization was received on Jan. 31, just under two weeks after the truce agreement.
Over $40 million was later trimmed due to rules banning aid in the form of cash payments.
USAID then finalized contracts with eight major groups—including UN agencies and well-known NGOs—to deliver aid across Gaza. But officials soon began hearing reports that these agencies were not receiving reimbursed payments, despite already using significant resources under the assumption USAID would compensate them.
As a result, several of those partners have reduced operations and cut spending.
A displaced Palestinian woman waits at the edge of her tent in a vast encampment beside demolished buildings in Gaza City on Saturday, March 1, 2025, during Ramadan. (AP Photo/Abdel Kareem Hana)
A displaced Palestinian woman waits at the edge of her tent in a vast encampment beside demolished buildings in Gaza City on Saturday, March 1, 2025, during Ramadan. (AP Photo/Abdel Kareem Hana)
• Copy Link copied
Link copied
• X
The International Medical Corps, which runs healthcare services globally, had secured $12 million to keep two hospitals functioning in Gaza, one of which is the largest field hospital built with USAID funds at Israel’s request.
Now, the organization seeks reimbursement surpassing $1 million, but the payment freeze has forced it to lay off approximately 700 staff and scale back to essential services only, a USAID official stated.
A former IMC employee noted that its malnutrition treatment program was almost entirely halted due to lack of funds. They said under anonymity that current nutrition services were severely diminished.
Meanwhile, termination notices have started reaching multiple aid partners—some of whom provided shelter, protection for children, and logistics support. These letters, viewed by the AP, were signed by new USAID deputy Peter Marocco, who previously served during Trump’s first term. They instruct recipients to stop operations immediately and refrain from additional expenditures, citing an order from Secretary of State Marco Rubio.
As Ceasefire Wobbles, Internal USAID Disarray Complicates Gaza Efforts
Additional turmoil within USAID, including erratic policy changes under the new administration, has further paralyzed relief efforts.
During the first stage of the ceasefire—lasting 42 days—Israel was expected to allow 600 relief trucks into Gaza daily, alongside the delivery of 60,000 temporary units and 200,000 tents.
USAID originally aimed to procure 400 temporary shelters during the first phase, increasing to over 5,000 in the next. That number was drastically cut to just over 1,000 units, two officials reported.
Due to new requirements for procurement approvals, no mobile homes were ultimately purchased by the agency.
On Feb. 2, around 40% of USAID’s Gaza team lost access to email and software tools essential for tracking funds and operations. The deactivation notices came from Gavin Kliger, an official with DOGE.
Though access has since been restored, ongoing layoffs have shrunk the Gaza unit from roughly 30 to just six or seven staffers.
People line up outside a Gaza City bakery to buy bread on Monday, Feb. 24, 2025. (AP Photo/Abdel Kareem Hana)
People line up outside a Gaza City bakery to buy bread on Monday, Feb. 24, 2025. (AP Photo/Abdel Kareem Hana)
• Copy Link copied
Link copied
• X
With a bare minimum number of shelters brought in during Phase 1 of the truce, which ended recently, Hamas accused Israel of failing to uphold its obligations.
In response, Israel has blocked all aid deliveries into Gaza, hoping to compel Hamas to agree to a truce extension. This move has left humanitarian agencies scrambling to pull together remaining supplies. Prime Minister Benjamin Netanyahu has indicated he may also cut electricity access to increase leverage on Hamas.
Dave Harden, a former USAID assistant administrator specializing in conflict and humanitarian crises, said the current volatility is undermining U.S. presence in the region.
“American aid to Palestinians never rivaled what went to Israel in scale. But it provided influence—a place at the table to shape outcomes,” Harden explained.
He added, “Right now, we’ve lost that leverage. We’re not even meaningfully engaged, and that puts the truce in a precarious position.”
Mona Al-Zebda, displaced from Gaza City, makes bread over a fire at a refugee tent site in Rafah’s Muwasi area on Monday, Feb. 24, 2025. (AP Photo/Jehad Alshrafi)
Mona Al-Zebda, displaced from Gaza City, makes bread over a fire at a refugee tent site in Rafah’s Muwasi area on Monday, Feb. 24, 2025. (AP Photo/Jehad Alshrafi)
• Copy Link copied
Link copied
• X
Members of the Abed family sit near a fire in a refugee tent encampment in Rafah’s Mawasi area, southern Gaza, Monday, Feb. 24, 2025. (AP Photo/Jehad Alshrafi)
Members of the Abed family sit near a fire in a refugee tent encampment in Rafah’s Mawasi area, southern Gaza, Monday, Feb. 24, 2025. (AP Photo/Jehad Alshrafi)
• Copy Link copied
Link copied
• X
Buildings ravaged by Israel’s ongoing military operations in Gaza are visible from across the border in southern Israel, Sunday, March 2, 2025. (AP Photo/Leo Correa)
Buildings ravaged by Israel’s ongoing military operations in Gaza are visible from across the border in southern Israel, Sunday, March 2, 2025. (AP Photo/Leo Correa)
• Copy Link copied
Link copied
• X
___
Reporting was contributed by AP journalists Josef Federman in Jerusalem, Sarah El Deeb in Cairo, and Ellen Knickmeyer in Washington.
