Actually, they can be. Some donors want their scholarship funds used for merit awards … but they also want the awards to go to students with financial need, if possible. So schools have a pool of merit funds, but they need to allocate certain merit funds with need as a consideration. The school will usually discourage donors from putting these restrictions on their donations, but they aren’t going to turn down the money if the donor insists on the restrictions. There are always some students who qualify for merit who also have need, so the school will match those funds with those students. But the students are in the pool without regard to financial need in the first place. (And I would be shocked to find a pool of merit applicants that doesn’t organically include some students with need.)
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