In actual fact, it reduces the propensity to form a crack from the thin cut edge. It reduces the chance of vibrations flexing the original thin flat plate at that point and thus causing fatigue cracks through the vibration. The flange, in effect, does stiffen it to reduce the flexibility.
We are also being very loose with terminology. As the flange is perpendicular to the plane of the platework, it is effectively increasing the thickness of the component and stiffening it around two of the axes at the expense of the third. In fact, as we are into the ‘breadth times depth cubed’ bit of elasticity, you get a huge increase in stiffness around these for not much loss on the other.
Richard