the Fatwa Department Research Committee - chaired by Sheikh `Abd al-Wahhâb al-Turayrî
It is indeed lawful to give money to people who ask. It is an act of charity to do so.
Allah says the following:
“And in their wealth the beggar and the one who is denied his due share.” [Sûrah al-Dhâriyât: 19]
“And those in whose wealth is a recognized right for the beggar and the one who is denied his due share.” [Sûrah al-Ma`ârif: 24-25]
“It is not righteousness that ye turn your faces Towards east or West; but it is righteousness to believe in Allah and the Last Day, and the Angels, and the Book, and the Messengers; to spend of your substance, out of love for Him, for your kin, for orphans, for the needy, for the wayfarer, for those who ask, and for the ransom of slaves; to be steadfast in prayer, and practice regular charity; to fulfil the contracts which ye have made; and to be firm and patient, in pain (or suffering) and adversity, and throughout all periods of panic. Such are the people of truth, the Allah-fearing.” [Sûrah al-Baqarah: 177]
Source: Islam Today