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I like Kant's take on this. He argued (roughly, by memory) that giving to people begging on the street directly was a selfish act, as it's satisfying our own need to feel better about ourselves more than the needs of the homeless population, and would lead to an unfair distribution giving more money to those who are talented at evoking empathy rather than those that might need it the most. He argued that the unselfish thing to do would be to donate to the cause indirectly, responding not to the emotional response in the moment but to a rational consideration of the needs of the homeless population.
I think he has a point. That said, there's nothing wrong with being selfish every now and then, especially not if your selfishness gives someone a warm meal. And empathy is a healthy human reaction.
Your parents seem to have failed to grasp the challenges facing the homeless population. A better take would be "don't give that guy money, start donating regularly to a local charity instead and help make sure that help is given to all those who need it".
Oh, and also, rally for political change.
Kant had a point there, but I think he also fails to address the problem.
The existence of charitable organizations means that the government has failed that group of people. Charitable organizations are extremely inefficient and sometimes are prone to the exact problems he brings up with donating directly to individuals, or they may prioritize certain individuals with certain religious beliefs over others.
Charitable organizations need to be folded and replaced with government programs. We don't need to be paying CEOs salaries when we're just trying to help someone on the street.
Source on charities being extremely inefficient?
I mean, you can look anywhere, whether it's upwards of 70% of medical donations not being used: https://academic.oup.com/inthealth/article/11/5/379/5420717?login=false#151492984
Also you can dive into the problems with definitions of "the cause" https://hbr.org/2009/06/beware-of-highly-efficient-cha
A charity can loosely define what counts as their cause which means they can tell you that 95 cents on the dollar go to the cause, even if it's only 20 cents.
Moreover it's really suspect that the rich keep getting richer even in the "nonprofit" sector: https://www.vox.com/the-big-idea/2017/4/24/15377056/big-charities-best-charities-evaluation-nonprofit
Furthermore, even from an innocent standing. When you have multiple charities working on the same thing, that's crazy inefficient.
Let's talk about the Red Cross, great organization. One of the things they do is blood donations. They're responsible for about 35% of the blood donations in the US, the rest come from other non profits.
That means there's competition among the non profit blood donation organizations to provide blood for emergencies. Whether they want to compete or not, they have to.
Just from a blanket statement, if you moved all of those blood donations under a single entity, you remove a lot of inefficiencies.
You don't need to advertise for multiple organizations, you don't need to coordinate with all those different organizations during a crisis, you don't have the same overhead for the same problems across multiple organizations. It's just by design, inefficient. It's not their fault.