The blog is pitched as a question about welfare and preference, but isn't this also/instead a question of rights and responsibilities or permissions and obligations - especially in the context of poverty?
E.g. if I give money in fulfilment of my obligation to help avert a wrong, and then the recipient spends that in a way that does not avert that wrong, what does that do to the distribution of responsibility for the wrong that occurs, and for my fulfilment of my obligation? Doesn't it redistribute at least some (all, potentially?) of that responsibility or liability to the recipient?
Or, what about the case where the recipient has weighty obligations that he could use the money to fulfil (e.g. to his children), and chooses not to spend that money on those obligations when he should/reasonably could have done (in the absence of him doing anything else to fulfil his obligation). In such a case it might not be morally permissible for the recipient to do whatever he wants with the money.
So, isn't the answer to the question about 'working well' dependent on more than just the welfare/preferences of the recipient? And isn't a careful moral account of working well (I'm not claiming that this is what I've given here) something that could ground anyone fairly having a view on these questions, taking due account of relevant justifying and excusing factors. The quote from Klosterman speaks to these issues, it seems to me, though I think they look different in cases with greater wrongs and obligations at stake?
There are going to be some moral requirements of relative cost-effectiveness too in these sorts of cases, it seems to me, at least where resources are tight and obligations weighty and immediate.