I really can't see a downside. If they seem to be obviously homeless or they're actively asking for help, they probably need it. Though it's extremely unlikely that your meager contribution will be the change that suddenly allows them to magically overcome poverty and become middle class home owners with well paying jobs, that doesn't really make them need it any less. Whatever they use the money on, it's going to be what they need in the immediate term, be it drugs or food or anything really and unlike others this is the only way they can really get that money so they do need people to occasionally part with it. You'd only give it to them because you had it spare anyway and it's not going to make them more homeless than they already were. If the concern is that it's not addressing the root personal problems that put them individually on the street or the root social problems that put many on the streets, that's completely true but if you're serious about doing that you're going to need more than the couple of bucks in your pocket anyway. That's going to be concerted massive political will and financial effort and several people's lifetimes worth of work all at the same time, besides you can always involve yourself in some way in such efforts and hand over spare change. The only times I can really think of where it makes sense not to give directly are: you can't afford to do it, the physical circumstances of handing it over are dangerous/impractical, you don't care about homeless people or other people in general or you subscribe to some nasty Malthusian ideas and think yourself somehow benevolent for condemning people to destitution as some kind of "cruel to be kind" doctrine in which case you're unlikely to have given this a lot of thought anyway and don't really face much of a dilemma.