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Given that most people feel somehow smaller for having needed help (not wanting to be a 'charity case' not wanting to use 'the begging bowl') I would actually consider the second more compassionate. It much easier for the person receiving help if they are merely accessing a fund to which they have rights as a citizen who will at various times pay varying amounts of tax and national insurance.
To be poor and asked if you need help can be a humiliating and upsetting experience. Asking for help even more so.
As we live in a world where many people do have to rely on personal compassion then personal charity is a compassionate act. But to me it is more compassionate to agree as a society to set up a fund for those in need without them having to accept the charity of their fellows.
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