While there are people out there who are genuinely down on their luck, I've found that most of the panhandlers in our area are either addicts or "professional" panhandlers. A lot of my sympathies went out the window when I saw no less than six panhandlers pile out of a minivan to take up their positions on various street corners. And, anytime I see someone panhandling and using their kids for "props" (for lack of a better term), I will call the police on them without hesitation.
One of our band roadies used to be homeless. He always told me the best way to tell the difference between a con-artist or addict and someone genuinely down on their luck was to look at their shoes. If they are wearing good shoes, or shoes that look new, odds are they are just trying to pull one over on you.
The one thing about this program is that it will separate those who need a chance versus ones who are looking for a quick hit. I've heard stories that when people have offered work to those who hold signs "Will Work For Food", they'll run off rather than take the person up on their offer.