Someone recently (late 2011) wrote me and asked this question. This is a slightly edited version of what I said. Think of it as a description rather than a prescription.

Actually, we do not have any official written policy. We are not primarily a service agency or mercy ministry; we just have lots of neighbors with many needs. I can explain my perspective on how we informally operate after a few decades of being a church in this neighborhood. We intentionally leave a lot to the judgment of those who are ministering. It’s about personal relationships, not institutional services.

In practice, the help we give fits one of two categories. One is exceptional help for people in a circumstance where they are caught short or need help getting back to stability. This might be in the form of helping with a bill, “loaning” a security deposit, or helping to keep someone from being evicted when it looks like they’ll be able to cover their rent in the future. The idea is that we are not seeking to create a dependency situation wherein someone looks to us to maintain their regular living expenses; but we are willing to help with exceptional circumstances. This usually happens through someone spending some significant time getting to know the person and their circumstances. Occasionally we will help with a one-time expense without knowing the person too well; it is a
judgment call.

The second category is the people who just never seem to get their act together (or are simply unable to get it together). With them, it is a few dollars at a time for food or whatever over a longer period of time. This one is handled on a much more personal level. That is, it is not church money. It is personal money that doesn’t go through any church account, though we do share information so that people are not “double dipping”. We help one another when one of us is tapped out. We also do not encourage people in the church to step into this role unless we think they are ready. Getting ready involves gaining experience by watching more experienced folks handle this sort of thing and talking it over. Fred Newkirk is freer with his dollars than anyone else around here; but he is also
much more gifted at ministering through the interaction that goes along with being in that role. And, he is the exception in that it is not always personal money with him; donors give money for this ministry when they can. There’s a lot to talk about there. The rest of us are more limited in what we do with this role. We need to know the person pretty well and understand their situation and
think it is a good idea to help them.

Or (to people who come to the church and ask for financial help), I might say something like “We are a church, and we are here to help people follow Christ. If we get to know you well, we will naturally be involved in your life in deeper ways to help you follow him. But if the only time I see you again is for you to ask me for more money, the second or third time the answer will be no.” I might well give a small amount of assistance if I have it. Then I have to be able to remember people who test me.

Overall, my goal is God’s glory. That glory is often reflected through his people. When Christians have the reputation of being less generous than the average person on the street, then we have a problem. Jesus said to give to those who ask, so I usually do when I have it within what I explained above. If the amount is an amount that impacts what I know God has given me to do in my life (like pay the bills to keep my family fed and warm), then I don’t have it to give. The truth is that I could say yes to a lot of people who ask me for spare change or a dollar without it impacting my life measurably; it doesn’t happen THAT often. I know the common wisdom is never to give money. I know that people sometimes use money they get from us to feed their sin. However, when they are ready to do serious spiritual business, they go back to the people from whom they experienced generosity rather than the people from whom they experienced judgment. That doesn’t mean I hand over money to the alcoholic breathing vodka into my face when he asks for spare change. There’s judgement and a prayerful attitude involved to make it work. It’s not easy.

For a much more thorough background, I highly recommend When Helping Hurts: Alleviating Poverty Without Hurting the Poor. . .and Yourself by Brian Fikkert and Steve Corbett.