We require that farmers show that they're planting and plowing or that they're refraining. The money is to encourage either planting and plowing or not planting. Depends on the produce.
We require that Pell grant recipients actually register for classes. Pell grants are to subsidize tuition and fees.
We require that people taking the mortgage deduction have mortgages. Same for health care deductions.
All of these are part of implementing government policy. It may feel like free stuff, like the child care credit gets me "free" money, but if I don't have documentation that I either provide up front or have in case of audit I may not take the deductions or credit.
What's done with the money is up to the person, since paying the money implements policy fairly directly. A farmer can plant collards if he's getting a subsidy not to plant sorghum, and he can spend that money on a European vacation--as long as he doesn't spend it on planting sorghum, he's met the requirements.
So why do we subsidize poor people with the various programs put under the "welfare" category?
To implement public policy. We want them to have shelter, we want them to have at least minimum levels of clothing and food. If it's being spent for other things, then it's not implementing public policy. And often it's not spent because as soon as people who got the money to spend it on food sometimes spend it on other wants that are more pressing--and they'll cover the needs later. Where I student taught mothers who got money for formula realized the school employees would provide it if the mothers didn't, and found other uses for the money.
If they don't need it, then means testing should strip them of the subsidy because the subsidy isn't a gift it's a means of implementing public policy. It's not "doing until the least" in an affirmation of unification of church and state, nor is it primarily a means of leveling wealth distribution. It's a means of reducing poverty and making sure basic needs are met, which is public policy.
The problem with saying there's no evidence that "the poor" actually spend their money in inappropriate ways is a very poorly framed question. It leaves out information, it includes extra information, and it leads the reader to make bad inferences.
No, most poor don't abuse the system. "The poor" is a generic and that means "the average or prototypical poor person." At the same time, some poor do abuse the system, and "the poor" glosses over individuals because we also interpret the generic noun to mean "all of the poor." How do we know that some poor abuse the system?
Because all those cards being swiped, all those accounts being accessed, they all provide Big Data. And so legislatures have asked their welfare distribution agencies to provide lists of where money's spent and what it's spent on. There's a small amount that is spent wildly inappropriately, and while individual expenses can be argued over it's fairly clear that not all of them can be justified. Some is spent nowhere near the residence of the person receiving it. A lot's spent on luxuries or to service addictions, until that's prohibited. Then we know from enough studies that people sell their benefits at a discount for ready cash to cover things that the subsidies don't cover. And that's not always rent.
So some accounts from California--the last bit I read up on and the one I remember the best--had withdrawals at casinos in Vegas, money spent on lobster and such. Had the cards been reported stolen, no problem--but they weren't. Perhaps they were lost, perhaps the owners didn't know they were stolen or lost. But the inappropriate use was too large to be accounted for in that way, and often the cards returned to being used in entirely appropriate ways. Usually such accounting reports (not "newspaper reports" or "reports from the white privilege zone"
justify these laws, however tangentially.
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