There's been a study done on grants in South Africa... they do improve people's living standard. Your "solutions" do not help the poor at all if they aren't receiving an income. Also whilst grants may not be the wisest (/most beneficial) way to spend money from your point of view, from the governments point of view it makes sense as they're just giving out money for people to spend. It'll comes back to them eventually... with the benefit of those receiving it having a higher chance to receive an income outside of the grant itself.
http://www.unicef.org/southafrica/SA...s_csg2012s.pdf