The Zen master is really compassionate and forgiving. Knowing that stealing is wrong, yet the master gave the thief His clothes when he had nothing else to give. Like what pgdharma said is true, He offered it to the thief because he didnt want the thief to collect more negative karma. The master was practicing the paramita of goods giving.
I have found this online at http://www.buddhistdoor.com/oldweb/bdoor/archive/nutshell/teach15.htm
BODHISATTVA'S PRACTICE - SIX PARAMITAS
Paramita is a Sanskrit word, which means to cross over to the other shore. It implies crossing over from the Sea of suffering to the Shore of happiness, from the Samsara of birth and death to Nirvana and from ignorance to enlightenment.
A Bodhisattva who practices the Six Paramitas, can take across the Sea of Suffering, enter Nirvana and attain enlightenment. Since these are also the six ways that can cross the sentient beings over, therefore, they are called Six Paramitas.
One of the six Paramitas are :
There are three kinds of givings:Goods Giving
For those poor and disabled, we have to help them with money and goods for living. If people cannot survive, are not satisfied with their basic need, they will not listen to what you say and follow what you do. Though the help is sometimes minimal, it is an immediate solution to relieve them from suffering, starving, coldness, etc. With the immeasurable mind of compassion, a Bodhisattva does not hesitate to help under these circumstances.
To teach him how to fish is better than to give him a fish. For those who has no skill to work, we have to teach them to work in society, earn a living without relying on the financial support from others. Our financial resources are limited. Money is not an ultimate solution to all problems.
Fundamentally, we have to help them improving their karma that has led them to where they are now. We have to help them to understand the principle of cause and effect and other Buddha's teachings, which is a long-term solution. Buddha Dharma giving is the highest order of giving.
It is also called fearlessness giving. For those who live in vexation, fear and despair, we have to take care of them and encourage them to overcome any difficulties encountered.