Dawson called a Tuesday afternoon press conference in Birmingham where he said $800,000 of the state's money was given to the recently shuttered LGBTQ group Free2Be since 2015 from grants from the Alabama Department of Economic and Community Affairs department.
"I was reminded of how broke we are," Dawson said of the discovery, noting that the state has a lack of funds.
Free2Be, formerly known as GLBT Advocacy & Youth Services, was a non-profit founded in 2009 with the mission of "ensuring the physical, emotional and spiritual well-being of youth and young adults struggling due to sexual orientation or gender identity issues, according to non-profit search engine Guidestar.
The Facebook page for the organization's Birmingham location says that all its offices are now closed.
Dawson said that by awarding the money, "we've placed one worldview over another" and "betrayed Alabama values."
Organization programs included the LGBTQ Youth Peer Support Groups in Huntsville and Mobile, which has supported 150 area youth. It also started the Free2Be Safe Anti-Violence Project in 2014.
Dawson says that in 2017, Ivey's first year as governor, the group received "three-quarters of a million dollars" in grants from the state.
Dawson said pointing out the grants wasn't about bullying and said he was the target of bullies himself as a child.
"No child or person should ever be bullied," he said.
Free2Be also had a Safe office in Birmingham that offers counseling, referral and case management services.
Dawson said the organization wants to "impose homosexual and transgender ideology on our youngest generation."
The organization is part of the State Department's Young Leaders of the Americas Initiative, according to its website. Free2Bee's founder and CEO James A. Robinson participated in a reverse exchange program in 2017 in Belize, where he worked with leaders and the LGBTQ population.
Robinson has degrees from Auburn University and UAB in education and political science.
Dawson said giving money to the organization calls into question secrecy in state government, saying state legislators would have known about any grants awarded through ADECA.
The money calls into question what else Ivey has kept from the public since she took over as governor following Robert Bentley's resignation.
"She had the chance to right the ship, and on this she failed miserably," he said.
"She seems to think we're playing marbles on the playground instead of running the highest office in the state."
Dawson told reporters that all voters, even members of the LGBTQ community, should be concerned about the funds. He noted that his campaign is trying to figure out where the money went after the organization closed its doors
"Alabama doesn't need another political surprise in our history," he said.