I lived in DC for many years, and that was the consistent advice. OTOH, in the City Paper (local independent weekly) there would occasionally be interesting stories about how, for example, you could not get toothpaste from the shelters (maybe it was something else, it's been awhile, but some similar toiletry item). You need toothpaste to maintain yourself, and so there is a lot of seemingly "minor" needs falling through the cracks.

It is undeniable that most of the homelessness is due to mental illness and/or drugs, and if you give to panhandlers you are perpetuating the problem. But living in DC you are also in the street a lot (hanging out in Dupont circle or whatever), and you get to know the homeless in your area. It's just really hard to feel good about any decision you make, and it is hard to say no to someone you've had conversations with. OTOH, you also see them absolutely incoherent on a bench and know this is not going to end up well. Then they disappear.... it's hard. So many still haunt my mind.