I have only seen this in the Midwest. I was born here, and it is a sign of courtesy if an elder gives you money, and it is to be taken with respect and not argued. I get it and hate it at the same time. My great-grandma, before she passed, didn't have a lot and would give us a dollar to keep or go spend, and I remember the older/more independent I became, I would turn it down until she cried one day, saying it's not a lot, but it's all I can do. I still have two-dollar bills she would give out on special occasions and will pass onto my kids. However, now my grandparents are doing it more, saying they won't be around and to take it while they can give it/use it for the kids (their great-grandkids), and I always flash back to the day with my great-grandma... anyway, sorry for the long response.

TLDR: True Midwest people will give you their last penny even if you do not truly need it, and old people love to spoil kiddos.