As such, the United States will intensify dialogue with the United Nations, host governments, and worldwide stakeholders about new models and new approaches, which may include direct bilateral assistance from the United States and other partners, that can provide today's Palestinian children a more durable and dependable path towards a brighter tomorrow, Ms. Nauert said. Palestinian President Mahmoud Abbas' spokesman called that U.S. decision an attempt to force the Palestinians to abandon their claim to Jerusalem.
UNRWA now supports some five million registered Palestinian refugees and provides schooling to 526,000 children in the Palestinian territories as well as in camps in Lebanon, Syria and Jordan.
What did the United States do? The US is now UNRWA's single largest donor, but President Trump reportedly wants that to change.
Yesterday, Washington, which until past year was by far the agency's biggest contributor announced it was ending funding to the "irredeemably flawed operation".
Why did the United States cut funding?
The American Center for Law and Justice explained that Trump had promised to cut funding "to the terrorist affiliated Palestinian Authority as long as they continued to reward the families of terrorists".
It has also said it is unhappy that Unrwa has kept expanding the number of people eligible for assistance, and says its business model is "simply unsustainable and has been in crisis mode for many years".
More than 700,000 Palestinians were forced from their land in the events leading to the establishment of the state of Israel.
"After using humanitarian aid to blackmail and pressure the Palestinian leadership to submit to the empty plan known as 'the deal of the century, ' the Trump administration plans to commit an immoral scandal against Palestinian refugees by giving itself the right to abolish [their] historical rights", Abbas said.
US President Donald Trump has argued that the US, which has been the largest donor to the agency for decades, is paying too much without getting "appreciation or respect".
He has previously tweeted that the USA has not received "appreciation or respect" for the aid it has provided, and that the Palestinians are unwilling to negotiate with Israel.
On Tuesday, Nikki Haley, the USA ambassador to the United Nations, complained that "Palestinians continue to bash America" although it's the main donor for UNRWA.
The Times of Israel reported that "Jordan said Thursday it would host a fundraiser at the United Nations headquarters in NY next month to keep UNRWA afloat".
What has the reaction been?
"We reject in the strongest possible terms the criticism that UNRWA's schools, health centers, and emergency assistance programs are 'irredeemably flawed, '" Gunness added in a series of Twitter posts.
Hamas spokesman Hazem Qassem accused the United States of going after UNRWA to eliminate the Palestinian right to return to their future homes.
Earlier on Friday, German Foreign Minister Heiko Maas said Germany would increase its contributions to the agency because its funding crisis was fuelling uncertainty.
In Gaza, the Islamist group Hamas also condemned the U.S. move as a "grave escalation against the Palestinian people".
"Such a punishment will not succeed to change the fact that the United States no longer has a role in the region and that it is not a part of the solution".
They have reportedly said that serious cuts to UNRWA's budget would create a vacuum in the provision of basic services in the Strip, where the majority of residents are dependent on the organization.
Palestinian leaders have cut contact with the USA since the Trump administration backed Israel's claim of Jerusalem as its capital.