I learned recently of a project called the $2 Portrait. If you are in an urban area, chances are you will be approached by a panhandler and asked for money. Thomas Hawk, an outstanding street photographer, began a project where $2 is offered in exchange for the person's portrait and their story. See more information here.
I think he has the right idea. This simple transaction shifts the encounter from an act of charity to the typical arm's-length business deal. Now, charity is a good thing, indeed, and should be practiced. But I think this provides the person who needs the money a sense of dignity. They are not getting a handout, they are, for that brief time, your business partner and so there is respect.
Mike here is from Michigan. In chatting with him, we discussed the shipyards in Wyandotte, and the family and friends we both have that hail from that region. He was sitting at the entrance to Olvera Street in Los Angeles, California. At the end of our exchange, we shook hands and hoped to see each other again.

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