Danite, Shalom, I don't think funding the Palestinians through NGO's would work. Israel would give up all control over decision making process to entities that are not accountable to anyone. Nor would Israel get recognition for what they do. At best, Israel would be accused of being patornalistic. The only option is to either negotiate with the PA once Hamas merges and recognizes Israel, or to disangage unilaterally. A sovereign nation can never give up its rights to charity organizations.
Ex-FM Lieberman: Firebomb attack in Jerusalem a reminder that norm is Arab terror against Jews (Haar
from the article: Don't boycott the Palestinians