I'm reading Thomas Woods' book on the Progressive Era and one of the things that struck me was just how church philanthropy of that era so intertwined the physical and spiritual. Relief of poverty was viewed as a means to an end, not an end in itself - it was the means which would enable the poor to pray.
I suspect this emphasis makes all the difference in the world. When poverty relief is deemed an end itself--or, indeed, the highest end--it begins to take on grotesque forms. The end doesn't have to be prayer, it could be something else--pursuit of the good and moral life, for instance--but there has to be something higher than mere material relief.