I don't think that giving participation awards is wrong. I think that when most people say they can't believe clubs give participation awards they mean they can't believe their youth sports organization is giving participation awards to the wrong people.
Particpation awards can and should be given. That said, how participation trophies and awards are given and presented determines how effective they are. Bux-Mont Awards does not recommend giving participation awards to high school athletes. We do, however, recommend giving participation awards at the lower levels of youth sports.
As most parents can attest, at the earliest levels, participation in youth sports can be a challenge. The levels of efforts needed to ensure success at that age is great. Just getting through the rigors of trying to get in the fundamentals of any sport at such a young age is rough for all involved parties.
While it is often most challenging for the parents and the coaches, it is also a challenge for the kids. Learning many things at that age, kids need much positive reinforcement. They need to know that their hardwork will not go unrecognized and that their efforts will be rewarded.
When you are talking about creating a feeder program that teaches the kids the absolute basics, it's about having fun, enjoying your time with the other kids, and getting some exercise. Just making it through a season is reason enough to be rewarded.
I don't think that kids in higher grade levels should be given participation awards, because for them it's more of a skill game; the wins and losses count and they should. For younger children just trying to learn how fun the game can be, their participation trophies can be the difference on whether they come back next year or not.
And you don't want the next pele becoming a concert pianist because his skill wasn't given the proper chance to develop do you?