It sounds like there was a merit based award that has morphed into a need based award. I wish there were more local awards simply based on merit, the need thing, especially in a small town or small school just adds complications. My nosy neighbors don’t really need to know if I had a good or bad year in business. I recall our school granting need based awards to people whose parents had mobile phones and regular manicure/acrylic nail appointments, back when a mobile phone was unusual and very expensive. Granting small school need based awards can be a real mess.
My gut reaction would be to push for merit based awards.