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Generally, I don't give money to panhandlers. Oregon has a very good system of social services, and so if you're on the street, it's largely a choice--especially around these parts. We have so many dirty crusty old hippies that you can't tell the difference between them and the homeless sometimes, and sometimes there are just people who like that nomadic lifestyle.
I really don't carry cash, and that is largely why I don't give out money, but also because they largely don't ask for it. Most homeless here turn in cans for money instead. Honestly, I'm more likely to give them food or to give them information about where they can go--where the mission is, where DHS is, where the drop-in shelter is.
And yes, we must be understanding and care for the homeless--over half of them suffer from debilitating mental illnesses, alcoholism, and an estimated quarter of them are Vietnam veterans. I have close friends with mental illnesses, and a great-aunt who suffered from schizophrenia, and I see how easy it would be for one of them to slip through the cracks, and become one of those homeless.
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If I am not better, at least I am different. --Jean-Jacques Rousseau
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