Businesses (including nonprofits) hire people to cut costs/risks or raise revenue (or impact). How would a deeply personal story help convince a hiring manager that paying this person a competative salary would lead to the business value?
I agree, but if candidate pre prepares these stories they are likely to be able to frame the situation and their impact in a way that looks positive regardless of what the actual situation was. Process would select for people who can tell good stories, or pay copywriters to edit stories, rather than selecting people who are good at the role.
More information (from employer perspective) is gained by making this process interactive, at some cost of time and money to both parties.