That's the best way to do it. Otherwise all the money will go to the rich brat children of politicians/etc who are socially connected to whoever they put on the selection committees.

Why wouldn't you? How do you define merit to artists? Many of the greatest artists of all time lived their entire lives in poverty and desperation.

To not have selection bias so you can measure the effects

Random selection is possibly the fairest way to select almost anything, depending on your definition of fair.

Mostly because the kind of people who run and advocate for programs like this are actively hostile to the idea of merit. Prioritizing talented people would be antithetical to them.