The welfare system is not designed to keep people dependent on the system. Because some people have that outcome is not due to the design of the various systems. [some people are addicted to television but that does not mean the broadcasting industry is designed to keep people dependent on that system]
But to draw from your assumption, how would you change the system to eliminate the dependence and how would your address the consequences of those changes?
Not designed to keep people dependent, but not designed to make them independent. I think the perpetuity of the system (ie - it won't end, there's nothing I must do) leads to this dependence. It's not a temporary crutch at all, at least not anymore. That is the difference between charity and government. Government can't help but perpetuate itself and grow, for every person "helped" is a vote and the power of government secured. It must grow in this model, and I don't think those who want to use the government to effect this help are that sinister in their motivations. They are just using a bad method.
Bear, the work you have done in your community, helping, is what this country is all about, neighbor helping neighbor. Given the resource limitations you mention, and the scale of the problem you see, I know it is hard to imagine anything but the government making a dent. But, those resources originate as dollars, a buttload of it scooped up, mailed to DC, the fed takes its cut, then rides in like heroes to distribute it back, to both the Sly's, who needed a temporary crutch to tide him over, and to those who have no interest in pulling themselves up. I would bet that once your community groups determined that someone who could simply wouldn't, they went to the bottom of the must help list. I see no reason we the people have to get the government involved in this, at least not the federal one.
Way back before GW destroyed his credibility, he started talking about the faith based initiative thing, and what a hoopla it caused. It was, of course, a tactical error to tie it to religious institutions, as that pesky COTUS thing would come up, but the objective I saw, returning charitable work to charities and let the government back out, was very good. Of course, it was yet another opportunity squandered.