This thesis investigates the impact of the donor policy and practice of the United States Agency for International Development (USAID) on Palestinian NGOs. By applying the principles of critical discourse analysis, it examines the conception of civil society communicated by USAID and analyses how it affects the discursive dynamics within Palestinian civil society. Based on analysis of qualitative interviews with Palestinian NGO personnel, it suggests that Palestinian civil society can be understood in terms of a struggle between two competing discourses. One affirms the traditional role of Palestinian civil society which has been to mobilise for the political resistance against the Israeli occupation, while the other supported by USAID, constitutes a far more limited role for Palestinian civil society. The analysis demonstrates that USAID promotes a rigorous and de-politicised conception of civil society; to balance the power of the state. Palestinian NGOs that are funded by USAID have adopted and reproduced this idea in their discursive practice within civil society. Consequently, their activities primarily address domestic issues related to the governing institutions of the Palestinian Authority rather than issues related to the Israeli occupation. USAID influences the practice within Palestinian civil society by strengthening NGOs that reproduce its own conception of a de-politicised civil society. This support consists of both funding and training which subjects NGOs to the donor s ideational influence. Moreover, this ideational influence is enforced by conditional funding. The thesis shows that USAID s policy alters the balance of strength between perspectives on the future development of Palestine. Tilting this balance has real consequences by shifting the activities of Palestinian NGOs away from highly politicised forms of resistance against the occupation and towards a-political domestic issues. Based on these findings, the thesis looks into the normative implications of USAID s policy and practice based on Tocquevillian and Gramscian research traditions. This normative discussion accentuates the inherent paradoxes in subsidising civil society, whose virtue lies in being independent from government interference, both foreign and domestic.