One benefit of meeting basic needs (like housing, food, utilities) directly is that it's easier for the people who need it. Some others here have pointed out that many homeless people have something that keeps them from managing a household, and taking as much of that off their shoulders is helpful in that it allows them to build a life step-by-step, for example by focusing on mental and physical health first and at some point education, instead of having to adjust to a lot of stuff at once.

Also, yeah, addictions are a thing. And I don't mean that as in "Oh, those people are so irresponsible! We can't trust them to spend their money right!". Addiction fucks you up (and/or is a result of the world fucking you up), and if what has been your only way to feel not-completely-terrible for a while is the other option, I don't think I can personally blame anyone who isn't able to take steps along a long and difficult road with uncertain outcomes, with their basic needs still not met.

In short: Money is a tool that can be used to meet basic needs, but by itself it does not meet basic needs. Using it to do that is not easy, especially if you're not used to that, and double-especially if you're addicted to something as a result of your shitty living conditions.

(I should note that I'm _not_ speaking from experience here. If someone who has some, ideally someone who has second-hand experience with many people, please correct me!)