[SubjectToChange]

It seems like you have misunderstood the author of the article.

The point of the MacArthur Foundation is basically to launder the MacArthur name in the eyes of the public. So that when people see "MacArthur" they associate it with prestige and — more importantly — the excellence of its recipients, not its sleazy origin. Hence why recipients are only chosen when they have proven that their names are useful for the MacArthur Foundation.

In your example, the MacArthur Foundation wouldn't be giving out scholarships to high performing students, they'd be giving money to people like Donald Knuth. In other words, people who have already shown that they didn't need the money to be successful and don't really need the money to continue performing at a high level. Of course, it isn't a complete waste, but it doesn't go towards developing the next Donald Knuth. The MacArthur Foundation isn't "promoting excellence", it's "celebrating" the excellence in which it took absolutely no risk in developing. As the author says "The enterprise is not merely silly, but snooty: an exercise in invidious distinction for its own sake."