SPOILERS AHEAD – Don’t read if you haven’t seen “Man Behind the Curtain”
What we saw happen in Ben’s flash back must have been “The Incident” that was spoken about in the “Orientation” tape.
The only explanations that I can come up with about the continued food drops marked “The Dharma Initiative” is that there’s someone out there that either doesn’t care what happened to the original team (which I doubt), or the more likely explanation that someone convinced whoever was in charge that “The Hostiles” got in, killed everyone, and he was the sole survivor.
If one of the people in the Dharma Inititive on the outside was the person that initiated the killing of the original Dharma group, they would be in a good position to convince others on the outside to continue funding. Why would they do that? Because they saw something about the island that they thought they could use for their own purposes, probably something radically different than what the original Dharma was trying to do.