This article is a travel topic
When traveling, you will without a doubt come across people asking for money. After all, poor people everywhere will reason that anyone who can afford to travel – by definition – has money to spare.
In some cases begging is fairly passive activity and in others it can be more aggressive and intimidating. If you feel threatened, walk away quickly and head for a nearby shop or restaurant. Dressing in a understated manner (to look less affluent or more like a local) may make you less of a "mark" for begging, and treating people with respect may help avoid altercations. Try to keep in mind that beggars are all individuals in difficult circumstances (even those who beg by "choice").
It is not a good idea to give children money as they are often sent out for this purpose by their parents or other adults, which should not be rewarded or encouraged. In less developed countries, orphans or unwanted children may end up forced into begging by mafia-type gangs, who appropriate their takings and give little in return. In some countries such as India it's not unknown for children to be purposely deformed to make them more profitable to their parents/masters. If you must, give food instead of money, which will at least do them some good.
If you are considering giving a small gift such as candy or pens to children, recognize that this encourages dependence on foreigners and can lead to more aggressive behaviour, including physical fights with his or her peers over your well-meaning gift. Consider giving gifts to parents to distribute if you feel that they are appropriate.
In Hindu and Buddhist countries giving alms to monks or nuns is an accepted part of the culture, a religious observance for the giver. In many religions, especially Islam, giving alms to the poor is also a religious obligation (while beggars themselves are looked down upon). Note that some non-religious people may have co-opted this approach in order to profit from tourist "donations".
There are various possibilities to consider instead of giving money to beggars:
Donate time and/or money to a local or global poverty reduction program instead of giving change to individuals. Poverty is a complex social issue and begging is a symptom of a bigger problem.
Make a donation when you visit a church, mosque, or temple. This is a sign of respect for the local religion. In most places, religious organisations (regardless of whatever faults they may have, or whatever theological disagreements you may have with them) do good work among the poor.
Spend a bit of money with poor people who are not begging. Give the street musicians a few coins, buy some flowers from the hawkers, take a rickshaw or a donkey ride. Play the game; bargain hard and try not to get grossly overcharged, but accept that some people need to make a living off tourists. You are probably going to pay more than a local would; don't worry too much about it.
If tipping is considered appropriate in the country you are visiting, tip well.
Many travellers do not agree with the above comments and suggestions. As a traveller in a foreign land you are often much richer than most local people even if you consider yourself to be travelling on a budget. Remember that most people who beg are doing so out of desperation. Also remember that very little of what you spend in many countries will end up in the pockets of local people, especially if you choose to stay in expensive hotel chains. Give generously but remember not to treat the money like monopoly money or you will insult people.