JERUSALEM — Funding cuts by the Trump administration to the United States Agency for International Development (USAID) are causing significant disruptions for aid organizations, leaving many grappling with financial strain. These cuts have resulted in frozen payments amounting to hundreds of millions of dollars, which were initially allocated to help manage Gaza’s humanitarian needs during a delicate ceasefire. It has put a strain on organizations trying to support the ceasefire brokered with U.S. assistance.
USAID had planned to be a major source of aid for Gaza under the terms of the ceasefire, and over $383 million was approved to this end. Yet, there have been zero confirmed payments to aid partners in the region as of now. Many USAID officials, despite surviving multiple rounds of layoffs, remain apprehensive about discussing details, fearing potential reprisals.
Senior figures from major aid organizations have confirmed that despite promises, they have not received the anticipated funds after committing significant resources to providing essential supplies and services. This financial limbo is unsustainable, as some groups have been forced to lay off employees and cut back on their activities, according to information shared within USAID.
This situation jeopardizes the ceasefire terms, which require Hamas to release hostages in exchange for Israel freeing Palestinian prisoners and growing the flow of humanitarian aid. Jeremy Konyndyk, president of Refugees International, expressed concerns that the U.S. obligations for aid delivery, as per the ceasefire, cannot be met under the funding freeze.
Efforts to slash the federal government size have left USAID particularly affected, having previously been equipped with about $446 million for Gaza relief in 2025. Following a waiver to keep funds flowing to Gaza, $383 million was secured, though further reduced by $40 million designated for direct cash assistance. Contracts signed with multiple partner organizations aiming to deliver supplies and services to Gaza are left unfulfilled as these entities await USAID’s disbursements after having spent heavily, anticipating reimbursements.
As a result, some NGOs like the International Medical Corps have been forced to make dramatic cutbacks, limiting services at hospitals and laying off a substantial number of employees in Gaza. The group, awarded $12 million by USAID, has curtailed crucial nutritional programs due to the funding freeze. Former staff members cite reduced personnel and medical supplies, and although stocks of necessary items exist, they cannot cover the costs for their delivery to Gaza.
Termination letters from USAID have been sent to significant partners in Gaza’s aid response, instructing an immediate halt to activities. Amid administrative upheaval and regulatory changes since the new administration took charge, USAID has struggled internally, with disruptions impacting operations in Gaza. Additional policies have delayed procurements of mobile homes intended for Gaza relief—a situation worsened by significant team reductions after email system lockouts.
During the ceasefire’s initial phase, Israel committed to allowing substantial aid into Gaza. However, due to procurement holdups, USAID failed to deliver on housing obligations, thus strains on the ceasefire have emerged, with aid deliveries from Israel halted. Consequently, aid organizations are striving to manage with reserves, while Israeli Prime Minister Netanyahu considers further pressures on Hamas, including possibly cutting electricity.
Dave Harden, a former official with extensive USAID experience, warned that without active U.S. involvement, the ongoing ceasefire faces instability. He highlighted the historic role U.S. aid played in mediated discussions between Palestinians and Israelis, a dynamic now jeopardized by the absent engagement. The diminishing U.S. presence risks undermining the negotiation process and shoring up the already fragile truce.
