For people fortunate enough to have extra money in their pockets, giving it away can be fraught with stress. The decision to give or not to give money to homeless people has real-world consequences. This question is not concerned with the legality of giving money, but rather with the moral and ethical dilemma that goes along with it.
No, you never know what they might do with it.
Once that money has changed hands, you relinquish control over what the other person does with it.
They may spend it on drugs, alcohol, or gambling
Giving money to beggars is wrong because they may easily spend it to perpetuate a cycle of abuse or addiction. The giver has then contributed to a negative cycle.
Acts of kindness are often more for the person doing the action than the recipient. It's simple: doing good makes us feel good.
Scientists and psychologists have discovered that doing good deeds causes people to biologically feel good. The brain releases "feel-good" neurotransmitters when you give charitably, in a cycle that psychologists call "the helper's high."
People who run charities started the organization with an understanding of how to best homeless people. Charities are better equipped to make a real impact for homeless people because charities are the combined, organized efforts of a group of people.
Giving something other than money shows that you care
Giving food rather than money to a homeless person demonstrates to them that you care about their well being. To take the time and effort to give money over food shows the homeless you have compassion and empathy.