We give out $1 McDonald's gift certificates (2 or 3 buys a decent meal off of the dollar menu). Sure, they could conceivably be sold to other people for money, but eventually, someone who's hungry will get a meal. Handing out the certificates is a compromise we're comfortable with.
We always ask if the person would like the gift certificates before giving them out. In Detroit, we often got disgusted looks and "no" answers - they only wanted money. Here in TX, everyone (so far) has been very grateful and sincere.
There was a study done on a major intersection in the Detroit area, one we drove through nearly every day when we lived there. They found that beggars at that intersection were pulling in $200 - $300 a day. That's really good money. Why WOULD you work? Set your own hours, keep all the profits, pay no taxes... it's great!
Seems like we're on the same page.