Three weeks ago the BBC World Service Trust, a charity for the British network, was angling for a share of State Department funding to promote Internet freedom. But after Americans revolted at the idea, the organization has pulled out entirely, failing to even submit a grant proposal.

The BBC charity had developed a lucrative relationship with the U.S. government during the Obama administration. U.S. tax dollars are supporting at least two BBC World Service Trust projects: The State Department gave the organization $300,000 for work in Burma and USAID gave it $4.5 million for a project in Nigeria.

But outrage from American taxpayers, members of Congress and the Broadcasting Board of Governors was apparently enough to dissuade the British organization from making a formal proposal this time. At stake was up to $28 million in funding for work on Internet freedom issues.

Even with the BBC World Service Trust out of the running, there’s still hard feelings over a British organization seeking U.S. funding for work that the federal government’s own taxpayer-funded broadcaster does as well.

Voice of America Director Dan Austin told me he recently confronted his British counterpart, Peter Horrocks, director of the BBC World Service, about U.S. funding going to the BBC World Service Trust for broadcasting support and training in Burma and Nigeria.

“We like to make the point that while we’re all for media development in countries, when it’s Nigeria and Burma, we have significant operations and a larger audience share than the BBC World Service as well as our own journalism training operation,” Austin said at a VOA event in Washington. “This is probably an issue the U.S. government needs to work out internally.”

The BBC World Service was reportedly close to shutting down its Burma operation when the U.S. funding arrived. And in Nigeria, where VOA has a proud history, the British are providing broadcasting equipment and media training — resources Americans could have offered.

At a time when funding is scare, that’s led some critics to question the appropriateness of letting the notoriously anti-American BBC earn goodwill abroad at the expense of U.S. taxpayers.

Commissioners on the Broadcasting Board of Governors take the issue seriously. But even more troubling to them is the State Department’s unwillingness to give the BBG — a federal government agency — a share of the $28 million dedicated to Internet freedom.

“For more than seven years, the BBG has had to do Internet circumvention work on a daily and hourly basis,” said Michael Meehan, a Democratic commissioner on the BBG. “And that is why the State Department in 2009 sent us $1.4 million. We had great success and we think we’re the best federal agency to handle Internet circumvention.”

The BBG’s work has caught the attention of Capitol Hill. Sen. Dick Lugar (R-IN), ranking member on the Foreign Relations Committee, recently wrote in a report that “the BBG is perfectly placed to serve as the lead U.S. government agency in assisting [Internet Censorship Circumvention Technology] efforts.”

BBG commissioners met this week with Reps. Kay Granger (R-TX) and Nita Lowey (D-NY), chairwoman and ranking member of the House Appropriations subcommittee that oversees State Department funding. Despite their pleas, the BBG is unlikely to get any of the $28 million for Internet freedom.

“We support what the BBG does. We think it’s a valuable mission for the American people,” said Daniel Baer, a deputy assistant secretary at the State Department. “We support congressional funding for what they do. If they need technology to enhance the reach of their information, we support that objective. We see it as distinct from what we do, which is focusing on Internet freedom as a human-rights policy priority.”

Over the next few weeks, Baer said the State Department will be reviewing the proposals and negotiating arrangements to commence the Internet freedom work. And while the BBG likely won’t receive any money, it’s not the end of the road.

That’s because the House-passed continuing resolution that funds the government for the remainder of this fiscal year includes language directing the State Department to provide $10 million to the BBG — leaving the State Department no choice in the matter.