I guess it could mean something like scholarships for the poor or something? Seeing as how charity is by definition need based I can't very well see a merit based model. Admittedly there is a merit based welfare system too, or at least government money that you can gain access to. They're called grants. If you have a grant proposal call your senator, they tend to have someone on staff whose job is to help with grant writing.
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Can Charity and Merit Replace the Welfare State?